"He said this was now priced into markets, so expected attention to turn to when the Fed would start hiking interest rates, which depended on inflation and employment data."
https://www.cnbc.com/2021/09/14/us-bonds-treasury-yields-rise-ahead-of-inflation-data.html
There may be one more brief several week expansion, but tapering is not likely to end anytime soon. Once governments admit higher inflation is necessary there will be a competition between developing and industrial countries.
World economy is in trouble. Will crypto save it?
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""In no state, metropolitan area, or county in the U.S. can a worker earning the federal or prevailing state or local minimum wage afford a modest two-bedroom rental home at fair market rent by working a standard 40-hour work week,""
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Timeline
2008 A major contraction/recession which is dealt with by mild 'quantitative easing' i.e. increasing public debt.
2020 Another major recession is expected imminently, but Covid pops up and the slowdown is carefully managed by governments around the world, much like artificial expansions are created in wartime.
2021 Money printing begins to ramp up. A global strategy begins to emerge of testing various aspects of economics as a science. It appears that the only way this will work is by vastly increasing government control in major economies, as was done in the Soviet Union. Bitcoin type currencies, the digital economy, will facilitate government control, and large economies will be forced to work together to keep stability, until a major economy is in position to replace the U.S. sphere of control.
One of the camouflages for both money printing and increased government control of economies, around the world, is likely to be variations of universal basic income. A good idea by itself, its implementation is likely to be in a less generous spirit, as a tool to control large populations by giving them a sliver of inflating currencies. Government limits on liquid physical assets like metals will follow soon after in countries where economic influence is declining i.e. the U.S. and Western Europe.
https://nypost.com/2021/06/18/young-nyc-homeless-to-get-1250-each-month-in-city-backed-study/
Here is an interesting article. The name of the article is "10-year Treasury yield continues slide, falls to 1.17%"
And some humor to counterbalance that.
Obviously the U.S. government has been propping up bonds to a ridiculous degree, giving the impression that there isn't much concern in the markets about inflation, now it's getting close to the point where there will be some shock to the dollar's value due to this kind of monkeying. So the next step has to be a massive shift to commodities unless governments are trying to solve the world's problems by throwing everybody into extreme poverty, which is actually a possibility.
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As of mid 2021 the economy is definitely in uncharted waters.
It looks like the entire global economy is built around a collaborative arrangement between Japan and the extended U.S. to carefully balance yen, gold and dollars. Something which is not new. But with the Covid contraction, and a possible looming natural recession, and the money printing associated with Covid, it's very unlikely the two economies can stay on top of gold and other commodities much longer. In a smaller world with less wildcards they might be able to onboard other countries to a solution using U.S. military pressure, but that looks difficult now.
Just as a global contraction was looming, and countries were bracing for a recession, Coronavirus hit. So a slowdown was blamed on the virus.
But economies move in cycles, and a person has to wonder if the 'Covid slowdown' really substituted for the cyclical slowdown.
Worse, countries have been printing money like crazy for decades, building massive debts to fuel expansion, and it's a mystery how that plays out on a global scale. A Weimar scenario has been avoided by simply cooking books, just as Weimar solutions briefly avoid poverty by cooking books.
https://en.wikipedia.org/wiki/Hyperinflation_in_the_Weimar_Republic
Industrialization was supercharged by printing money, but commodity consumption is also very high, there are a lot of people who need to consume a lot of raw materials. There is a limited supply of commodities, raw materials, so there necessarily is competition for them, if consumption level is near maximum supply level, which it is. Sometimes this can be fixed by impoverishing one's competitors, but the normal industrial solution is that the bulk goes to the country or group with the best military.
Right at the last recession, in 2008, bitcoin was released and widely promoted.
Now, it's starting to look like countries might be planning to let their fiat currencies inflate, shift a lot of the economy into digital currencies, then slam the brakes on the 'decentralized' digital economy and start a fiat nationalist digital economy with CBDC type trash.
This would be like a huge tax on those that have cryptocurrency. They would lose x trillions of dollars, whatever amount of money had been drawn into the crypto economy before the brakes were slammed, but fiat issuers, i.e., governments, would benefit by having some of the froth diluted or removed from their balance sheets.
In other words the global melting pot will take another big step toward consolidating while it exterminates out group tribal entities.
Good news, maybe, if you belong to a powerful melting pot, or even a powerful tribe. But a nightmare scenario for less powerful tribes and any individuals who want a chance of any survival outside the global melting pot.
Combined with surveillance technologies and human nature, it looks bleak.
As commodity prices explode, there will be a few people who prioritize earth survival and indigenous interests.
But the overwhelming political pressure will be to provide enough resources to maintain a modest urban standard of living in countries that have well developed militaries.
So the first solution will involve limiting the political power of people in industrialized nations, or bleeding more resources from less industrialized areas or more likely both.
That has always worked in the past, but today is different.
There are enough educated people in the world, combined with enough people who have managed to retain their pre industrial instincts, that there is no real way it will end well.
So the most likely next step following a retaking of the economy by the global melting pot will be widespread proliferation of new weapons being used by countries to control their own citizens.
Maybe it will be a profitable thing from some viewpoint.
A smarter path would be short circuiting the recentralization by developing a better class of decentralized economy which is both productive and immune from interference by corporate melting pot interests.
Unfortunately, most people believe bitcoin type currencies are secure and productive.
Let the games begin.
The incredible timing of another Chinese crypto crackdown points to more evidence of Chinese financial collaboration with the West
Just as gold starts to spike and markets tank, China steps in to push down crypto, then their global partner, the U.S., joins them.
https://www.cnn.com/2021/05/19/investing/bitcoin-price-drop-china-crypto-intl-hnk/index.html
https://news.bitcoin.com/us-regulators-joint-cryptocurrency-regulation-high-priority/
Commodities and crypto are diverging sharply, something which does not serve the bitcoin narrative. A person's first guess would be that corrupt Chinese financiers are pushing coins into their market, as they did in 2013.
The timing though points to China acting in concert with the U.S. and Japan to deflate the frothy part of the global economy in preparation for a re entry by major melting pot economies into the world of officially monetized commodities and the start of cbdc's.
The specific deal probably gives China more control of strategic metals, through upcoming drama in Burma, in exchange for keeping the dollar on top a little longer.
The funny part is that the Chinese can be expected to honor their agreements.
Slow learners they are.
At the visible level, countries like the U.S. will support tribal interests in Burma as the Chinese start walking into that mess.
But the people who really pull the most strings, the financial muscle, will do whatever necessary to eliminate any tribal powers in that region from threatening 'the Chinese melting pot'.
The most common technique used to confuse the general public is to create a false hierarchy which 'explains' something.
https://www.reuters.com/world/china/what-beijings-new-crackdown-means-crypto-china-2021-05-19/
In this case there is ample room for supporters of many narratives to step in and say "No, it is not anything collaborative among melting pot powers, the Chinese are acting on 'x' or 'y' or 'z' motive." It further pushes the people at the top a little higher, and divides any genuine tribal interests which might challenge them.
Each of the narrative groups have their own perspective in which they are the elite, the only ones who see the full picture and are empowered to control destiny.
Melting pots create so many elites that there is literally nobody looking down as the ground prepares to swallow everybody.
One possible trigger for the next step in the economy is gold hitting 22,000 Japanese Yen. Japan is one of the few places where new highs in gold have meaning.
https://www.tradingview.com/chart/?symbol=OANDA%3AXAUJPY
In 2008 Japanese gold bugs were startled by the weak quantitative easing, then in 2013 by some other event that was not as bullish for gold as they had hoped. Once gold hits 22k Yen it will be a familiar situation to them. The big new variables being Covid and the increased power of the Chinese.
Now, both China and Japan will benefit by rushing further into gold as economies weaken. The main concern for the U.S. is to keep silver low relative to gold, because so much silver production is concentrated in indigenous populated areas of the Americas. Peru has the largest silver reserves in the world, and they are <10% white and >25% full blooded indigenous. If silver went sky high the U.S. would be in an immense strategic pickle. Mexico, Chile and Bolivia also have large silver reserves. So the U.S. is fully on board with Japan and China pumping gold. A renationalizing Japan pumping silver would not go over well in U.S. gov't circles though.
Australia is #2 in silver reserves, after Peru, and an explosion in silver would lead to a defensive reaction by 'white' Australia, along with its allies. They have been clever so far in 'managing' their indigenous prisoner population.
https://www.bbc.com/news/world-australia-55250137
But, again globalization is not white Australia's friend.
Here is a widely respected investor making widely respected mistakes.
Cathy Wood was the most successful etf chief among all exchange traded funds last year. There was nobody who made more money from exchange traded funds than her investors.
She says there will be deflation, based mainly on three factors, but she is probably wrong on each.
1) She sees commodities dropping because people will shift from buying goods to buying services.
But the service economy comes after the 'goods' economy. The consumption of food can't really drop a lot. The development of more sophisticated gadgets is not going to slow any time soon unless the economy tanks. Construction, likewise, is not going to slow unless there is a problem with the economy. So on this item she only guesses well if there is a serious economic slowdown, but most governments have made clear they plan to print their way out of any slow down. The European economic chief even said that explicitly. Anyway, if the service economy expands a lot it will be cash that will eventually rotate into goods. Somebody who suddenly gets a good service job will want to buy 'things'.
2) She says businesses went too far in ordering commodities in anticipation of a recovery.
Again, her premise is that an economic slowdown is coming, or at least that the merchants will not be able to sell their inventories. She may be right, but more likely governments are going to extend themselves to avoid a slowdown, with encouragement from politicians, so if anything there will be a rapid expansion. The alternative in developed countries is instability, which governments want to avoid because it leads to internal unrest.
3) Her last reason is "technological innovation and the disruption it causes".
Jerome Powell, the Fed chief, alludes to this sometimes as a variable that allows more space in an economy, gives it a hidden boost. Any deflation caused by this though is mostly not going to be in commodities. Most of the global population is going to be consuming more commodities as they plug into the global economy, even if they do it a little more efficiently.
She says "When you see AI training costs dropping 37-50% per year. These are massive deflationary forces that are going to hit every part of the economy. AI is going to be everywhere. That is good deflation,"....."Bad deflation is going to hit those companies that are going to be disrupted by all of the innovation that we talk about all the time. Based on DNA sequencing, robotics, energy storage, artificial intelligence, and blockchain technology."
She is using the phrase "AI training costs" in a nonsensical way. Like most people, she is referring to regular technological development as "AI". Basically saying technology will run over those who don't use it, but she throws in "AI" mumbo jumbo to be part of the gang that wins by confusing their competitors.
She has obviously done well in the past, and it's possible she is right based on some non public information she has access to, but it is unlikely.
As of the beginning of June 2021 a breakout looks imminent
One of the strangest things to follow is the correlation, or lack of, between gold and bitcoin. Anybody watching the markets daily after big news events knows that any correlation is contrived, not real.
As of early June, gold has been hovering, climbing slightly, as bitcoin corrects and appears to consolidate. It's very hard to explain bitcoin's lack of a substantial drop unless there is an extremely substantial source of money propping it up, one of many things pointing to a government hand in bitcoin.
If both gold and bitcoin go up from here then it would point to there being unnatural support for bitcoin.
There is not a whole lot that can be done to keep the price of gold down at this point, unless there were a massive sucking out of money from equities, a massive downward financial panic. That's a possibility as it would give governments a better position, an opportunity to buy more ahead of any remonetizing of commodities, but the price that would be paid in such an induced collapse would be very high for regular people. Another problem for those western governments who might try such a tactic is that it would put China in a very strong position eventually. Their currency is quite strong and getting stronger, so they are not going to be selling gold obviously. The only 'target' of this strategy would be western investors.
So it looks a little strange that suddenly bitcoin is recovering with gold as stock markets seem to pause a bit.
It looks unlikely, implausible, but if there is a major market collapse by mid June then it should be considered one more step in the surrender of the U.S. economy to China.
It is looking more and more likely that western businesses are being set up for a 'correction of sorts'
https://www.cnn.com/2021/06/02/economy/inflation-oecd/index.html
And of course the Chinese economy is ready this time.
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Here is a very strange article.
There must be some rationale for saying that 'sometime, well into the future, asset purchases, pumping in money, will, or might, be reduced'.
https://fred.stlouisfed.org/series/WALCL
Their comment has a reason behind it. They didn't just say 'let's say something that will make a news article', and the subject is sort of the lynchpin of the 'recovery', so it indicates concern on their part about something. In other words the normal thing would be to reduce purchases, taper, when appropriate. There must be a reason they jump up out of the blue and yell 'we will taper when appropriate'. It could be they are aware of inflation data or other numbers that are about to raise questions.
The numbers behind the 'extra cash' are already ridiculous. The U.S. deficit is already 28.3 trillion and will increase a few more trillion this year. There is not really any logic in using a thimble to scoop out little bits of cash. The only answer by conventional economics seems to be inflation,
"However, since 2015, the Fed has found a variety of ways to infuse cash into the economy without lowering the value of the dollar. These new policy tools, such as the repurchase window, may have ushered in a new chapter in the future study of macroeconomic policy, though it will be several years before economists and academics, in hindsight, will be willing to declare such tools effective or dangerous."
https://www.investopedia.com/terms/t/taper-tantrum.asp
Since the last major inflation scare in the 1970s some trickery has kept the dollar more or less stable, and it would have to be something involving other currencies.
The current situation isn't 'new' it's just a little more extreme.
Without making a new currency, though, there doesn't seem to be a way to keep the dollar stable relative to other currencies anymore.
Obvious strategy from China, at least
https://www.nytimes.com/2021/06/08/business/economy/china-inflation.html
China has been preparing a digital currency, so it's clear China will roll out its digital currency rapidly, then pour into commodities which will lower the digital Yuan's value a little, then monetize their digital currency with a commodity basket.
They are lagging the west by some decades as far as economic policy tactics, so they will probably have several decades of strong economic growth just from the brief move they do soon, unless there is some surprise. The big threat to China is from U.S. defensiveness obviously, but China has a vast amount of ammunition to protect itself in this regard, a vast amount of leverage against the United States.
It could well be, and seems to be, that the U.S. strategy has some element of making the U.S. the 'new' old China, letting liberties erode justified by a necessity to rebalance the dollar.
https://abcnews.go.com/US/wireStory/us-trade-deficit-dips-689-billion-exports-78147843
That would keep the dollar alive and make it possible for the U.S. to pay for decades of fiscal irresponsibility.
The 'problem' of having immigrants wanting to move to the U.S. would also be solved, pretty thoroughly.
Every single development recently involving the global economy seems to be a big step in the direction of China replacing the U.S. as controller of the world's economy. If there is a substantial contraction or turmoil which hits U.S. equities and also metals and certain commodities in mid 2021 then the U.S. is probably finished as a global influence in most ways.
The big historical thing, that a lot of people will miss or notice, is the shift in U.S. power from global to domestic. Just as the Soviet Union was hemmed in and had its power focused on its own citizens, the same will happen with the U.S. government. All of the vast U.S. bureaucracy that has been developed, an incredibly complex machinery, will gradually shift its focus to the near impossible task of preserving viability for the dollar domestically which will necessarily involve a vast increase in control bureaucrats have over U.S. workers.
The next 'big' news involving China in the U.S. media is likely to be some variation of 'China fails in attempt to rein in inflation because of Yuan strength, and U.S. exports surge dramatically'. This will actually be interpreted as good news for the U.S. by a lot of simpler people in the United States. Contemporaneous with this will be news articles which harden the borders of major melting pots like the U.S., an example might be bioweapon type news.
Looking at the relative movements of U.S. equities and bitcoin, compared to gold, a nightmare scenario for the United States will probably unfold if bitcoin is a creation of the U.S. government, and the Chinese are aware of that.
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Everybody seems to think that there is nothing unusual ahead in the economy, and the Fed can continue playing with money supply to 'control' inflation and promote growth.
"If inflation is indeed here to stay, as Livermore Partners anticipates, Neuhauser suggested this will cause troubles down the line and will cause the Federal Reserve to apply the brakes to its accommodative monetary policy. "
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April 3, 2020 https://www.nytimes.com/2020/04/03/upshot/coronavirus-jobless-rate-great-depression.html
June 16, 2021 https://www.politico.com/news/2021/06/16/fed-inflation-forecast-494921
"“But we don’t in any way dismiss the chance that it can work out that this goes on longer than expected,” Powell said. “There’s a lot to be humble about. We’re very much attuned to the risks.”"
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It's very likely that China is playing the U.S. the way the U.S. has played the world.
The Yuan has been getting super strong, and China would probably be buying some metals, and probably has been buying, but they announce that they are going to subsidize exports by feeding some metals to their manufacturers?
Everything looks like a lot of governments are preparing for some economic trigger event. At some point many or most governments are going to have to openly pile into commodities, but it might be they are going to wait for economies to disentangle more. A new virus would accomplish it.
The supreme irony would be if bitcoin and 'Google AI' became the dollar's final anchor
A lot of problems are popping up that would have been solvable if the United States had simply been an honest broker in the global economy, instead of a greedy pirate.
A clue about the current situation might be markets in April 2018
Lumber and steel futures charts looked dangerously inflationary.
https://www.tradingview.com/chart/?symbol=CME%3ALBS1!
Was some kind of conspiracy hatched by governments to artificially contract the global economy to buy time?
Are the outcomes of the actions pursuant to that conspiracy about to make things interesting?
Seatbelts fastened.
If there were an 'official conspiracy' to re examine economy as a science there would be some broad parallel attempts to provide psychological escape to the victims. Space travel hype would be a perfect choice. That would explain a lot of mysteries, including the dumping of SPCE stock by a lot of otherwise savvy investors, as the U.S. necessarily starts picking up the pace of asset purchases.
https://www.cnbc.com/2021/04/20/virgin-galactic-stock-drops-after-cathie-woods-arkx-sale.html
In Progress
Initial steps to reduce commodity consumption are conflicting with attempts to prevent economies from slowing too much.
The root cause of comedy https://www.globaltimes.cn/page/202105/1224361.shtml