Massive Forced Population Changes: Diversity + Proximity = War

Why it doesn’t work for the globalist Euro central government to force sudden, massive populations changes.

The more the government forces inextricable changes to their homeland, traditions and way of life, in the name of “diversity,”  the more Europeans will react with extremism.

The only motive has to be destabilization of civil society to allow for more Euro central government control.

the EU vs. Europe

German Far-Right “Reich Citizens” Organize Militia As Membership Skyrockets Ahead Of “Day X”

A far-right movement of Germans who have labeled themselves “Reich Citizens” (Reichsbürger) has grown to nearly 16,000 members, an increase of more than 50% over the last year – with a core group of armed militia members eyeing their own army to prepare for what they call “Day X,” reports Focus.

Reichsbürger is used as a label for a loosely connected group of Germans who believe that the 1871 borders of the German empire are still in effect and that all of the country’s governments since (and including) the Nazis have been illegitimate, many also subscribe to anti-Semitic ideologies,” according to Deutsche Welle​​​​, which adds “They believe that the current Federal Republic of Germany is a puppet government controlled by the Allied powers of World War II.”

Some members refuse to obey existing laws, pay taxes, and some members have even established their own “mini-kingdoms,” flying custom flags and forging phony passports. To participate in the movement, members must provide “Aryan Proof” of their bloodline up to 1914.

Read More: https://www.zerohedge.com/news/2018-01-18/german-far-right-reich-citizens-organize-militia-membership-skyrockets-ahead-day-x

Sweden Is Preparing For A “Civil War”: PM Wants To Deploy Army In No-Go Zones

For the first time since World War II, Sweden is preparing to distribute a civil defense brochure to some 4.7 million households, warning them about the onset of war.

 

The booklet will serve as a manual of “total defense” in case of a war, and provide details on how to secure basic needs such as water, food, and heating, the FT reported. The manual also covers other threats such as cyber attacks, terrorism, and climate change.

All of society needs to be prepared for conflict, not just the military. We haven’t been using words such as total defense or high alert for 25-30 years or more. So the knowledge among citizens is very low,” said Christina Andersson, head of the project at the Swedish civil contingencies agency.

The survivalist manual or better known by some as a preppers guide is called “If Crisis or War Comes,” will be published by the government in late spring. Its publication comes at a time when the threat of war from Russia is high, well, possibly, but that is what the mainstream media has conditioned many to believe.

What if the threat is not from Russia, but one that is domestic?

On Wednesday, Prime Minister Stefan Lofven said that Sweden would do whatever it takes, including sending in the army, to end the wave of gang violence situated in the no-go zones around the country. Sweden’s murder rate has been relatively low over the years, but thanks to the migrant crisis, police are powerless in many areas across the country.

Swedish PM: We could “DEPLOY THE ARMY” to tackle gang criminality in Sweden.

This is a serious admission that something is very wrong in Sweden.

Could this be why they sent out leaflets to 4.7 million households warning people what to do in case of war?https://www.svt.se/nyheter/inrikes/lofven-utesluter-inte-att-satta-in-militar 

It’s not my first action to put in a military, but I’m prepared to do what it takes to ensure that the seriously organized crime goes away,” Lofven said after the party leadership discussion in parliament.

“But it is also obvious that there are social problems. Last year 300 shootings occurred, 40 people were killed. The new year has begun with new launches. We see criminals with total lack of respect for human life, it’s a terrible development I’m determined to turn around,” he added.

Even the Swedish Democrat leader Jimmie Akesson “declared war” against organized crime and suggested that Sweden should deploy the military to no-go zones to counter the out of control violence.

People are shot to death in pizza restaurants, people are killed by hand grenades they find on the street,” Akesson said in parliament on Wednesday.

“This is the new Sweden; the new, exciting dynamic, multicultural paradise that so many here in this assembly … have fought to create for so many years,” he said sarcastically.

Peter Imanuelsen, an independent journalist in Sweden, summed up the recent developments in a timeline:

    • Government sends out leaflets to 4.7 million households telling them how to prepare for war
    • Leader for Swedish Democrat party says “A war is being waged on Swedish society”
    • Swedish PM is considering deploying the army in no-go zones…

Read More: https://www.zerohedge.com/news/2018-01-18/sweden-preparing-civil-war-pm-wants-deploy-army-no-go-zones

Explaining Our Money System a 14 Month Old

His mother tries to get him to go to bed at 9 p.m. But the little boy’s internal clock is still on Baltimore time; it tells him it is much too early to go to sleep.

Grandpa takes over, drawing out the monetary system like a general spreading a map on a field table. “Here is the enemy,” he says gravely. “They have us completely surrounded. We’re doomed.”

He seems to understand…

…that money is not wealth; it just measures and represents wealth, like the claim ticket on a car in a parking garage.

…that our post-1971 money system is based on fake money that represents no wealth and measures badly.

…that this new money enters the economy as credit… and that the credit industry (Wall Street) has privileged access to it. The working man still has to earn his money, selling his work, by the hour. But Wall Street—and elite borrowers connected to the Establishment—get it without breaking a sweat or watching the clock.

…that a disproportionate share of this new money is concentrated in and around the credit industry—pushing up asset prices, raising salaries and bonuses in the financial sector, and making the rich (those who own financial assets) much richer.

…that this flood of credit helped the middle class raise its living standards, even as earnings stagnated. But it also raised debt levels throughout the economy.

…and that it allowed the average American family to spend American money that Americans never earned and buy products Americans never made…

Instead, Walmart’s shelves were stocked with goods “Made in China.” The middle class lost income as factories, jobs, and earnings moved overseas. Debt stayed at home.

“Okay so far?” we asked James as his eyeballs rolled backward and his breathing slowed.

But one thing must still puzzle him. How did the new dollar actually retard growth?

Maybe it didn’t make people richer… After all, how can you expect to make people better off by giving them fake money?

But how did it make them worse off?

The Ultimate Absurdity

We began with an attack en masse across a broad, philosophical front:

“As you sow, so shall ye reap,” we said. “And when you put a lot of fake money into a society, you end up with a fake economy.”

Just look at Argentina in 2001… or Zimbabwe in 2006… or Venezuela now…

Prices go wild as people try to figure out what the money is really worth. But the economy shrinks.

It was the same way in Germany during the Weimar hyperinflation. People stopped producing. You might have a billion marks in your pocket, but you couldn’t find a bar of soap for sale.

“But wait… I know what you’re thinking…” we imagined James pushing back. “Those are all hyperinflation stories. We don’t have that now. Instead, we have much less inflation… Prices are almost stable.”

Yes… for now. The inflation is in the asset sector… and in credit itself… not in consumer items. But the phenomenon is much the same.

Fake money is giving grossly distorted information to everyone. In Manhattan, we are told that an ordinary apartment is worth $2 million. But in Geneva—where interest rates have turned negative—we are told that $2 million is worth nothing… You will have to pay one of the banks to take it off your hands.

Without honest money, real savings, and true interest rates, businesses and investors have nothing to guide them. They are lost in the woods. Few want to do the hard work, and take the risks, of long-term, capital-heavy ventures. Instead, the focus shifts to speculation, gambling… and playing the game for short-term profits.

What’s more, artificially low interest rates provide fatal misinformation. They tell the world that we have an infinite supply of resources—time, money, energy, and know-how.

Then, without its back to the wall of scarcity, with no need to make careful choices, capitalism becomes reckless and irresponsible with its most valuable resource—capital itself. It is destroyed, wasted, misallocated, and malinvested. Growth rates fall and the world becomes poorer.

James is startled awake. He is disturbed.

“What kind of a world have I been born into…?” he seems to ask.

Editor’s Note: The feds know an epic crisis is brewing. And they want to trap your money before you have time to protect it. They know the coming crisis will hit everything—your portfolio, your bank account… even the cash in your wallet.

Of course, America has seen plenty of crises before. But this time is different. Bill’s team recently put together a book revealing how bad things could get and how you can start preparing yourself today. Learn more here.

Doug Casey on the Coming Financial Crisis

Yellen Says Raise the Rates

Doug Casey was one of earliest authors I read during my awakening. The ideas he laid out were shocking to me at the time, but they were compelling because they made sense after years of accepting ideas that didn’t make sense. …P.D.

Justin’s note: Earlier this year, Fed Chair Janet Yellen explained how she doesn’t think we’ll have another financial crisis “in our lifetimes.” It’s a crazy idea. After all, it feels like the U.S. is long overdue for a major crisis. Below, Doug Casey shares his take on this. It’s one of the most important discussions we’ve had all year.

(If you missed the first two interviews from this series, you can catch up here and here.)


Justin: Doug, I know you disagree with Yellen. But I’m wondering why she would even say this? Has she lost her mind?

Doug: Listening to the silly woman say that made me think we’re truly living in Bizarro World. It’s identical in tone to what stock junkies said in 1999 just before the tech bubble burst. She’s going to go down in history as the modern equivalent of Irving Fisher, who said “we’ve reached a permanent plateau of prosperity,” in 1929, just before the Great Depression started.

I don’t care that some university gave her a Ph.D., and some politicians made her Fed Chair, possibly the second most powerful person in the world. She’s ignorant of economics, ignorant of history, and clearly has no judgment about what she says for the record.

Why would she say such a thing? I guess because since she really believes throwing trillions of dollars at the banking system will create prosperity. It started with the $750 billion bailout at the beginning of the last crisis. They’ve since thrown another $4 trillion at the financial system.

All of that money has flowed into the banking system. So, the banking system has a lot of liquidity at the moment, and she thinks that means the economy is going to be fine.

Justin: Hasn’t all that liquidity made the banking system safer?

Doug: No. The whole banking system is screwed-up and unstable. It’s a gigantic accident waiting to happen.

People forgot that we now have a fractional reserve banking system. It’s very different from a classical banking system. I suspect not one person in 1,000 understands the difference…

Modern banking emerged from the goldsmithing trade of the Middle Ages. Being a goldsmith required a working inventory of precious metal, and managing that inventory profitably required expertise in buying and selling metal and storing it securely. Those capacities segued easily into the business of lending and borrowing gold, which is to say the business of lending and borrowing money.

Most people today are only dimly aware that until the early 1930s, gold coins were used in everyday commerce by the general public. In addition, gold backed most national currencies at a fixed rate of convertibility. Banks were just another business—nothing special. They were distinguished from other enterprises only by the fact they stored, lent, and borrowed gold coins, not as a sideline but as a primary business. Bankers had become goldsmiths without the hammers.

Bank deposits, until quite recently, fell strictly into two classes, depending on the preference of the depositor and the terms offered by banks: time deposits, and demand deposits. Although the distinction between them has been lost in recent years, respecting the difference is a critical element of sound banking practice.

Justin: Can you explain the difference between a time deposit and demand deposit?

Doug: Sure. With a time deposit—a savings account, in essence—a customer contracts to leave his money with the banker for a specified period. In return, he receives a specified fee (interest) for his risk, for his inconvenience, and as consideration for allowing the banker the use of the depositor’s money. The banker, secure in knowing he has a specific amount of gold for a specific amount of time, is able to lend it; he’ll do so at an interest rate high enough to cover expenses (including the interest promised to the depositor), fund a loan-loss reserve, and if all goes according to plan, make a profit.

A time deposit entails a commitment by both parties. The depositor is locked in until the due date. How could a sound banker promise to give a time depositor his money back on demand and without penalty when he’s planning to lend it out?

In the business of accepting time deposits, a banker is a dealer in credit, acting as an intermediary between lenders and borrowers. To avoid loss, bankers customarily preferred to lend on productive assets, whose earnings offered assurance that the borrower could cover the interest as it came due. And they were willing to lend only a fraction of the value of a pledged asset, to ensure a margin of safety for the principal. And only for a limited time—such as against the harvest of a crop or the sale of an inventory. And finally, only to people of known good character—the first line of defense against fraud. Long-term loans were the province of bond syndicators.

That’s time deposits.

Justin: And what about demand deposits?

Doug: Demand deposits were a completely different matter.

Demand deposits were so called because, unlike time deposits, they were payable to the customer on demand. These are the basis of checking accounts. The banker doesn’t pay interest on the money, because he supposedly never has the use of it; to the contrary, he necessarily charged the depositor a fee for:

  1. Assuming the responsibility of keeping the money safe, available for immediate withdrawal, and…
  2. Administering the transfer of the money if the depositor so chooses, by either writing a check or passing along a warehouse receipt that represents the gold on deposit.

An honest banker should no more lend out demand deposit money than Allied Van and Storage should lend out the furniture you’ve paid it to store. The warehouse receipts for gold were called banknotes. When a government issued them, they were called currency. Gold bullion, gold coinage, banknotes, and currency together constituted the society’s supply of transaction media. But its amount was strictly limited by the amount of gold actually available to people.

Sound principles of banking are identical to sound principles of warehousing any kind of merchandise—whether it’s autos, potatoes, or books. Or money. There’s nothing mysterious about sound banking. But banking all over the world has been fundamentally unsound since government-sponsored central banks came to dominate the financial system.

Central banks are a linchpin of today’s world financial system. By purchasing government debt, banks can allow the state—for a while—to finance its activities without taxation. On the surface, this appears to be a “free lunch.” But it’s actually quite pernicious and is the engine of currency debasement.

Central banks may seem like a permanent part of the cosmic landscape, but in fact they are a recent invention. The U.S. Federal Reserve, for instance, didn’t exist before 1913.

Justin: What changed after 1913?

Doug: In the past, when a bank created too much currency out of nothing, people eventually would notice, and a “bank run” would materialize. But when a central bank authorizes all banks to do the same thing, that’s less likely—unless it becomes known that an individual bank has made some really foolish loans.

Central banks were originally justified—especially the creation of the Federal Reserve in the US—as a device for economic stability. The occasional chastisement of imprudent bankers and their foolish customers was an excuse to get government into the banking business. As has happened in so many cases, an occasional and local problem was “solved” by making it systemic and housing it in a national institution. It’s loosely analogous to the way the government handles the problem of forest fires: extinguishing them quickly provides an immediate and visible benefit. But the delayed and forgotten consequence of doing so is that it allows decades of deadwood to accumulate. Now when a fire starts, it can be a once-in-a-century conflagration.

Justin: This isn’t just a problem in the US, either.

Doug: Right. Banking all over the world now operates on a “fractional reserve” system. In our earlier example, our sound banker kept a 100% reserve against demand deposits: he held one ounce of gold in his vault for every one-ounce banknote he issued. And he could only lend the proceeds of time deposits, not demand deposits. A “fractional reserve” system can’t work in a free market; it has to be legislated. And it can’t work where banknotes are redeemable in a commodity, such as gold; the banknotes have to be “legal tender” or strictly paper money that can be created by fiat.

The fractional reserve system is why banking is more profitable than normal businesses. In any industry, rich average returns attract competition, which reduces returns. A banker can lend out a dollar, which a businessman might use to buy a widget. When that seller of the widget re-deposits the dollar, a banker can lend it out at interest again. The good news for the banker is that his earnings are compounded several times over. The bad news is that, because of the pyramided leverage, a default can cascade. In each country, the central bank periodically changes the percentage reserve (theoretically, from 100% down to 0% of deposits) that banks must keep with it, according to how the bureaucrats in charge perceive the state of the economy.

Justin: How can a default cascade under the fractional reserve banking system?

Doug: A bank with, say, $1,000 of capital might take in $20,000 of deposits. With a 10% reserve, it will lend out $19,000—but that money is redeposited in the system. Then 90% of that $19,000 is also lent out, and so forth. Eventually, the commercial bank can create hundreds of thousands of loans. If only a small portion of them default, it will wipe out the original $20,000 of deposits—forget about the bank’s capital.

That’s the essence of the problem. But, in the meantime, before the inevitable happens, the bank is coining money. And all the borrowers are thrilled with having dollars.

Justin: Are there measures in place to prevent bank runs?

Doug: In the US and most other places, protection against runs on banks isn’t provided by sound practices, but by laws. In 1934, to restore confidence in commercial banks, the US government instituted the Federal Deposit Insurance Corporation (FDIC) deposit insurance in the amount of $2,500 per depositor per bank, eventually raising coverage to today’s $250,000. In Europe, €100,000 is the amount guaranteed by the state.

FDIC insurance covers about $9.3 trillion of deposits, but the institution has assets of only $25 billion. That’s less than one cent on the dollar. I’ll be surprised if the FDIC doesn’t go bust and need to be recapitalized by the government. That money—many billions—will likely be created out of thin air by selling Treasury debt to the Fed.

The fractional reserve banking system, with all of its unfortunate attributes, is critical to the world’s financial system as it is currently structured. You can plan your life around the fact the world’s governments and central banks will do everything they can to maintain confidence in the financial system. To do so, they must prevent a deflation at all costs. And to do that, they will continue printing up more dollars, pounds, euros, yen, and what-have-you.

Justin: It sounds like the banking system is more fragile than it was a decade ago…not stronger.

Doug: Correct. So, Yellen isn’t just delusional. As I said before, she has no grasp whatsoever of basic economics.

Her comments remind me of what Ben Bernanke said in May 2007.

We believe the effect of the troubles in the subprime sector on the broader housing market will likely be limited, and we do not expect significant spillovers from the subprime market to the rest of the economy or to the financial system.

A few months later, the entire financial system started to unravel. You would have actually lost a fortune if you listened to Bernanke back then.

Justin: I take it investors shouldn’t listen to Yellen, either?

Doug: No. These people are all academics. They don’t have any experience in the real world. They’ve never been in business. They were taught to believe in Keynesian notions. These people have no idea what they’re talking about.

The Fed itself serves no useful purpose. It should be abolished.

But people look up to authority figures, and “experts.” The average guy has other things on his mind.

Justin: So if Yellen’s wrong, what should investors prepare for? How will the coming crisis be different from what we saw in 2007–2008?

Doug: Well, as you know, the Fed has dropped interest rates to near zero. I used to think it was metaphysically impossible for rates to drop below zero. But the European and Japanese central banks have done it.

The other thing they did was create megatons of money out of thin air. This hasn’t just happened in the U.S., either. Central banks around the world have printed up trillions of currency units.

How many more can they print at this point? I guess we’ll find out. Plus, it’s not like these dollars have gone to the retail economy the way they did during the “great inflation” of the ’70s. This time they went straight into the financial system. They’ve created bubbles everywhere.

That’s why the next crisis is going to be far more serious than what we saw a decade ago.

Justin: Is there anything the Fed can do to stop this? What would you do if you were running the Fed?

Doug: I’ve been saying for years that I would abolish the Fed, end the fractional reserve system, and default on the national debt. But would I actually do any of those things? No. I wouldn’t. I pity the poor fool who allows the rotten structure to collapse on his watch. Perish the thought of bringing it down in a controlled demolition.

They would literally crucify the person who did this…even if it was good for the economy in the long run. Which it would be.

So, these people are going to keep doing what they’ve been doing. They’re hoping that, if they kick the can down the road, something magic will happen. Maybe friendly aliens will land on the roof of the White House and cure everything.

Justin: So, they can’t stop what’s coming?

Doug: The whole financial system is on the ragged edge of a collapse at this point.

All these paper currencies all around the world could lose their value together. They’re all based on the dollar quite frankly. None of them are tied to any commodity.

They have no value in and of themselves, aside from being mediums of exchange. They’re all just floating abstractions, based on nothing.

When we exit the eye of this financial hurricane, and go into the storm’s trailing edge, it’s going to be something for the history books written in the future.

Justin: Thanks for taking the time to speak with me about this today, Doug.

Doug: My pleasure.

Read More: https://www.caseyresearch.com/doug-casey-coming-financial-crisis/

UN Agenda 21: Lesson 4: Smart Growth

ALWAYS remember the END GAME that is being sought by folks pushing Agenda 21/2030. The endgame is CONTROL over humans and the Earth’s resources, with the environment being used as the excuse.

UN Agenda 2030

This is the fourth lesson in a series of ten lessons on Agenda 21, commonly known as Sustainable Development.. Today you will learn…

 How Smart Growth Stategies are Used to Control Human Behavior Within the Human Settlement.

One of the goals of Agenda 21 is to re-wild over 50% (plus an additional 10% for buffer zones around the re-wilded areas) of the United States. Out of necessity, this will force the human population off the rural lands and into, using Agenda 21 language, “human settlements”. Once there, the behavior of humans can be more easily monitored and controlled, thus creating, “sustainability”.

Video: Lesson 4

Sustainability, as defined by the 1987 United Nations report is: “development that meets the needs of today without compromising the ability of future generations to meet their own needs”.

Using the words of Maurice Strong, who was Secretary of the 1992 U.N. Summit that was held in Rio de Janeiro (See Lesson 1), quote, “the consumption patterns of the affluent middle class-involving high meat intake, use of fossil fuels, appliances, home and work air conditioners, and suburban housing are not sustainable.” Unquote.

In other words, for Agenda 21/Sustainable Development to be fully implemented, Americans must give up the American dream and embrace the life style foisted upon them by the radical leftist Sustainablists.

To create sustainability in the human settlements, there will be rules and regulations to control use of all resources; air, land, water, energy, and all resources underground. These rules are included under the heading of “Smart Growth”.

Smart Growth regulations fall primarily into three categories that are all designed to modify human behavior.

1.  Regulations to discourage travel and the ownership of automobiles.

2.   Regulations that discourage you from having children.

3.    Regulations that will discourage you from using water, land, energy, and the consumption of materials, whether it be toilet paper or materials to build a home.

Here are some of the ways Smart Growth would control life and development in the human settlements. Note that all of these fall into one or more of the three categories discussed above, and that ALL of the items listed below are impacted if energy resources are rationed.

Establishing boundaries around the city and preventing any development outside the perimeter is a Smart Growth tactic. This creates a situation where land inside the human settlement is at a premium, while land outside the boundary has little if any value. This in turn will cause land prices, land taxes, and congestion within the perimeter to increase, but a decrease in the size of homes and number of children. Smaller homes and fewer children will also decrease energy usage.

Another Smart Growth strategy is to not expand the width or length of highways in an attempt to create congestion and an unpleasant driving experience. Allowing bikes to travel on these inadequate highway systems will further force the issue.

Creating rules to prevent the building of garages on new homes will discourage automobile ownership and save on building materials.

The installation of Smart Meters is a particularly contentious Smart Growth issue. Smart Meters can monitor and/or remotely turn off home appliances when the utility company decides the consumer is using too much energy. Further, the radio frequencies given off by these Smart Meters are associated with a variety of health issues.

Restricting the mining, drilling, refining, and/or transporting of fossil fuels will increase the cost curve for electricity, gasoline, natural gas, etc., which will in turn force conservation by the users.

Smart Growth regulations may eliminate from the market place all appliances except those that radically control energy and resources like water and electricity.  Everyone is familiar with low flow toilets which, while they may save on water, often function poorly.

Sometimes when regulations cannot create the desired change, grants and subsidies are used instead. When the government steps in to drive change in this way, the free market is eliminated.

An example of this is how the government has, through subsidies, encouraged the development of alternative energies while applying onerous regulations on the fossil fuel industry. At some point, when the cost of fossil fuels increase enough, and the cost of alternative energy decreases enough, alternative energy will be cost competitive. However, at that point in time, the cost of all energy sources will be artificially high forcing conservation by consumers.

Then again, expensive energy is seen by the proponents of Agenda 21 as a good thing, as shown by this quote from Amory Lovins of the Rocky Mt. Institute.

“It would be little short of disastrous for us to discover a source of clean, cheap, abundant energy, because of what we might do with it.”

Smart Growth policies are also being used to design new road projects. Many of the projects are driven by grants from the federal government sometimes funneled down through Regional Government. One of these projects is called Complete Streets. Below is a paragraph, which can easily be found on the Internet, from the Complete Streets Coalition. It reads…

Creating “Complete Streets” means those transportation agencies must change their approach to community roads. By adopting a “Complete Streets“ policy, communities direct their transportation planners and engineers to routinely design and operate the entire right of way to enable safe access for all users, regardless of age, ability, or mode of transportation. This means that every transportation project will make the street network better and safer for drivers, transit users, pedestrians, and bicyclists – making your town a better place to live.

There are many things about this single paragraph that are concerning.

First, it says that “transportation planners MUST change their approach to community roads.”  Whatever happened to local government control? What happened? Grants happened! The federal government is using your tax dollars to entice the local government to build the infrastructure for future human settlements where walking, bicycling, and mass transit will be the primary modes of transportation.Further, while sidewalks and bicycles may make sense in a populated area, “Complete Streets“ is pushing for sidewalks and bicycles paths in rural areas as well.

The local government may find that, by the time the cost of the bicycle paths and sidewalks are figured against the added grant money, the grant money went mostly to build road features that were unnecessary for rural use, while in exchange the government sold its autonomy for a too narrow road.

Add one final insult! By the time sidewalks and bike paths are added, even to a narrow road, the overall width of the roadbed will have increased, causing homeowners along the length of the project to lose parts of their front yards. This can have a negative impact on their property values.

Food and Fiber Sheds,Woodsheds, and False Choices

Since much of the land in the United States will be off-limits to humans, it will require that humans be limited to procuring that which they need to survive from the land near to the human settlements. But not to fear, the Sustainabilists have this all planned out.

Imagine a shooting target /bullseye with three consecutively smaller rings. The inner ring represents the area populated by humans. The ring that surrounds the inner ring is called the food shed. That is where all the food and fiber for the human settlement should be procured, of course, only through strictly approved and monitored methods of sustainable farming. The outside ring is the woodshed, where certain environmentally friendly human activities can occur. Beyond that lies the re-wilded land containing the buffer zones, cores, and corridors. These are off limit to humans. Travelling from one human settlement to another may incur fines, as the human will have, by passing through an environmentally delicate area, caused some degree of harm to the environment.

The loss of the rural lands for traditional farming, coupled with the design of future high density human settlements and the relatively small area of land around them for the raising of food, could create quite a dilemma for a human settlement that needs food to survive.

An idea being strongly forwarded by the proponents of Agenda 21 to replace traditional farming is vertical farming in multi-storied greenhouses. The claim is that food could be grown year round, isolated from disease and pests, and there would be a reduction in transportation costs.

If given a bit more critical scrutiny, one might ask how would a multi-storied green house be immune to pests and diseases when anyone who has ever raised a house plant knows that, at times, the plants get mites even under the strictest conditions.

One might also wonder, because this technology is a long way from production, if a lot of folks might die of starvation unless the switch-over from traditional farming to vertical farming is done in an extremely gradual and thoughtful way. However, as population reduction is a major goal of the proponents of Agenda 21, it makes one wonder if a situation resulting in mass starvation is not considered, by them, as a good outcome.

And then there is the never-ending litany over Greenhouse Gas emissions. Let’s take a look at the following quote.

“Buying local food within a foodshed can be seen as a means to combat the modern food system and the effects it has on the environment.

It has been described as “a banner under which people attempt to counteract trends of economic concentration, social disempowerment and environmental degradation in the food and agricultural landscape.”

Agriculture production alone contributes to 14% of anthropogenic (= “manmade”) greenhouse gas emissions. The food system’s contribution of greenhouse gases contributes to the global issue of climate change.  More attention is being paid to possibilities for reducing emissions through more efficient transport and different patterns of consumption, specifically, an increased reliance on local foodsheds.” Unquote. (Peters, 2008)

First, it is easy to see that as usual, the environment, in this case Global Warming and Climate Change, is the supposed excuse for this radical reconfiguring of man’s life style. Yet it remains to be seen if the globe is actually warming, and if so, whether man’s activity is responsible for the warming. A lot of doubt is cast when you see quotes like this one from Timothy Wirth, President of the UN Foundation)…

“We’ve got to ride this global warming issue. Even if the theory of global warming is wrong, we will be doing the right thing in terms of economic and environmental policy.”

The second thing worth noting is it is easy to see that Agenda 21’s 3 E’s, social, economic, and environmental justice, are all behind this effort to force a food-fiber-woodshed-human settlement model on mankind.

This is Agenda 21 social engineering at its best-or worst depending on how you look at it. Simply put, the folks behind this (and you might want to Google “the Club of Rome”), are retraining humans like we are lab rats.

In summary, while protecting the environment is a good thing, and if you CHOOSE to get your food close to home, recycle, or use a fuel-efficient car, that is fine. However, it is a false choice being offered here. It is NOT necessary to give up our freedom or our life style and be forced into human settlements in order to protect the environment. It is NOT an either or. We can live or lives in freedom and still protect the planet.

Read More: http://www.agenda21course.com/lesson-4-smart-growth/

What the Hell Are They Spraying? Lionel Interviews Dane Wigington of GeoEngineering Watch

It’s good that someone as mainstream as Lionel is taking on this topic.

Just look up. In the sky. Look. What do you see? From jets. High above. Those hazy, gauzy streaks of something. Crosshatched and thatched, hashtagged crisscrossed streams and plumes and streaks. Of something. Contrails? Water vapor? Ice crystals? Not a chance. These plumes and trails spread over huge swaths of land. But what are they? Dane Wigington of Geongineeringwatch.org joins me in what may very well be the most critical issue and problem that faces all of us. And all you have to do is look up. And don’t call them chemtrails. http://www.geoengineeringwatch.org/ www.facebook.com/Dane.Wigington.GeoengineeringWatch.org

The petro-yuan bombshell

by Pepe Escobar (cross-posted with the Asia Times by special agreement with the author)

The new 55-page “America First” National Security Strategy  (NSS), drafted over the course of 2017, defines Russia and China as “revisionist” powers, “rivals”, and for all practical purposes strategic competitors of the United States.

The NSS stops short of defining Russia and China as enemies, allowing for an “attempt to build a great partnership with those and other countries”. Still, Beijing qualified it as “reckless” and “irrational.” The Kremlin noted its “imperialist character” and “disregard for a multipolar world”. Iran, predictably, is described by the NSS as “the world’s most significant state sponsor of terrorism.”

Russia, China and Iran happen to be the three key movers and shakers in the ongoing geopolitical and geoeconomic process of Eurasia integration.

The NSS can certainly be regarded as a response to what happened at the BRICS summit in Xiamen last September. Then, Russian President Vladimir Putin insisted on “the BRIC countries’ concerns over the unfairness of the global financial and economic architecture which does not give due regard to the growing weight of the emerging economies”, and stressed the need to “overcome the excessive domination of a limited number of reserve currencies”.

That was a clear reference to the US dollar, which accounts for nearly two thirds of total reserve currency around the world and remains the benchmark determining the price of energy and strategic raw materials.

And that brings us to the unnamed secret at the heart of the NSS; the Russia-China “threat” to the US dollar.

The CIPS/SWIFT face-off

The website of the China Foreign Exchange Trade System (CFETS) recently announced the establishment of a yuan-ruble payment system, hinting that similar systems regarding other currencies participating in the New Silk Roads, a.k.a. Belt and Road Initiative (BRI) will also be in place in the near future.

Crucially, this is not about reducing currency risk; after all Russia and China have increasingly traded bilaterally in their own currencies since the 2014 US-imposed sanctions on Russia. This is about the implementation of a huge, new alternative reserve currency zone, bypassing the US dollar.

The decision follows the establishment by Beijing, in October 2015, of the China International Payments System (CIPS). CIPS has a cooperation agreement with the private, Belgium-based SWIFT international bank clearing system, through which virtually every global transaction must transit.

What matters in this case is that Beijing – as well as Moscow – clearly read the writing on the wall when, in 2012, Washington applied pressure on SWIFT; blocked international clearing for every Iranian bank; and froze $100 billion in Iranian assets overseas as well as Tehran’s potential to export oil. In the event Washington might decide to slap sanctions on China, bank clearing though CIPS works as a de facto sanctions-evading mechanism.

Last March, Russia’s central bank opened its first office in Beijing. Moscow is launching its first $1 billion yuan-denominated government bond sale. Moscow has made it very clear it is committed to a long term strategy to stop using the US dollar as their primary currency in global trade, moving alongside Beijing towards what could be dubbed a post-Bretton Woods exchange system.

Gold is essential in this strategy. Russia, China, India, Brazil & South Africa are all either large producers or consumers of gold – or both. Following what has been extensively discussed in their summits since the early 2010s, the BRICS are bound to focus on trading physical gold.

Markets such as COMEX actually trade derivatives on gold, and are backed by an insignificant amount of physical gold. Major BRICS gold producers – especially the Russia-China partnership – plan to be able to exercise extra influence in setting up global gold prices.

The ultimate politically charged dossier

Intractable questions referring to the US dollar as top reserve currency have been discussed at the highest levels of JP Morgan for at least five years now. There cannot be a more politically charged dossier. The NSS duly sidestepped it.

The current state of play is still all about the petrodollar system; since last year what used to be a key, “secret” informal deal between the US and the House of Saud is firmly in the public domain.

Even warriors in the Hindu Kush may now be aware of how oil and virtually all commodities must be traded in US dollars, and how these petrodollars are recycled into US Treasuries. Through this mechanism Washington has accumulated an astonishing $20 trillion in debt – and counting.

Vast populations all across MENA (Middle East-Northern Africa) also learned what happened when Iraq’s Saddam Hussein decided to sell oil in euros, or when Muammar Gaddafi planned to issue a pan-African gold dinar.

But now it’s China who’s entering the fray, following on plans set up way back in 2012. And the name of the game is oil-futures trading priced in yuan, with the yuan fully convertible into gold on the Shanghai and Hong Kong foreign exchange markets.

The Shanghai Futures Exchange and its subsidiary, the Shanghai International Energy Exchange (INE) have already run four production environment tests for crude oil futures. Operations were supposed to start at the end of 2017; but even if they start sometime in early 2018 the fundamentals are clear; this triple win (oil/yuan/gold) completely bypasses the US dollar. The era of the petro-yuan is at hand.

Of course there are questions on how Beijing will technically manage to set up a rival mark to Brent and WTI, or whether China’s capital controls will influence it. Beijing has been quite discreet on the triple win; the petro-yuan was not even mentioned in National Development and Reform Commission documents following the 19th CCP Congress last October.

What’s certain is that the BRICS supported the petro-yuan move at their summit in Xiamen, as diplomats confirmed to Asia Times. Venezuela is also on board. It’s crucial to remember that Russia is number two and Venezuela is number seven among the world’s Top Ten oil producers. Considering the pull of China’s economy, they may soon be joined by other producers.

Yao Wei, chief China economist at Societe Generale in Paris, goes straight to the point, remarking how “this contract has the potential to greatly help China’s push for yuan internationalization.”

The hidden riches of “belt” and “road”

An extensive report by DBS in Singapore hits most of the right notes linking the internationalization of the yuan with the expansion of BRI.

In 2018, six major BRI projects will be on overdrive; the Jakarta-Bandung high-speed railway, the China-Laos railway, the Addis Ababa-Djibouti railway, the Hungary-Serbia railway, the Melaka Gateway project in Malaysia, and the upgrading of Gwadar port in Pakistan.

HSBC estimates that BRI as a whole will generate no less than an additional, game-changing $2.5 trillion worth of new trade a year.

It’s important to keep in mind that the “belt” in BRI should be seen as a series of corridors connecting Eastern China with oil/gas rich regions in Central Asia and the Middle East, while the “roads” soon to be plied by high-speed rail traverse regions filled with – what else – un-mined gold.

A key determinant of the future of the petro-yuan is what the House of Saud will do about it. Should Crown Prince – and inevitable future king – MBS opt to follow Russia’s lead, to dub it as a paradigm shift would be the understatement of the century.

Yuan-denominated gold contracts will be traded not only in Shanghai and Hong Kong but also in Dubai. Saudi Arabia is also considering to issue so-called Panda bonds, after the Emirate of Sharjah is set to take the lead in the Middle East for Chinese interbank bonds.

Of course the prelude to D-Day will be when the House of Saud officially announces it accepts yuan for at least part of its exports to China. A follower of the Austrian school of economics correctly asserts that for oil-producing nations, higher oil price in US dollars is not as important as market share; “They are increasingly able to choose in which currencies they want to trade.”

What’s clear is that the House of Saud simply cannot alienate China as one of its top customers; it’s Beijing who will dictate future terms. That may include extra pressure for Chinese participation in Aramco’s IPO. In parallel, Washington would see Riyadh embracing the petro-yuan as the ultimate red line.

An independent European report points to what may be the Chinese trump card; “an authorization to issue treasury bills in yuan by Saudi Arabia”; the creation of a Saudi investment fund; and the acquisition of a 5% share of Aramco.

Nations under US sanctions such as Russia, Iran and Venezuela will be among the first to embrace the petro-yuan. Smaller producers such as Angola and Nigeria are already selling oil/gas to China in yuan.

And if you don’t export oil but is part of BRI, such as Pakistan, the least you can do is replace the US dollar in bilateral trade, as Interior Minister Ahsan Iqbal is currently evaluating.

A key feature of the geoconomic heart of the world moving from the West to Asia is that by the start of the next decade the petro-yuan and trade bypassing the US dollar will be certified facts on the ground across Eurasia.

The NSS for its part promises to preserve “peace through strength”. As Washington currently deploys no less than 291,000 troops in 183 countries and has sent Special Ops to no less than 149 nations in 2017 alone, it’s hard to argue the US is at “peace” – especially when the NSS seeks to channel even more resources to the industrial-military complex.

“Revisionist” Russia-China have committed an unpardonable sin; they have concluded that pumping the US military budget by buying US bonds that allow the US Treasury to finance a multi-trillion dollar deficit without raising interest rates is an unsustainable proposition for the Global South. Their “threat” – under the framework of the BRICS as well as the SCO, which includes prospective members Iran and Turkey – is to increasingly settle bilateral and multilateral trade bypassing the US dollar.

It ain’t over till the fat (golden) lady sings. When the beginning of the end of the petrodollar system – established by Kissinger in tandem with the House of Saud way back in 1974 – becomes a fact on the ground, all eyes will be focused on the NSS counterpunch.

Read More: http://thesaker.is/the-petro-yuan-bombshell/

The Highly-Anticipated 2017 Fake News Awards

#FakeNewsAwards

2017 was a year of unrelenting bias, unfair news coverage, and even downright fake news. Studies have shown that over 90% of the media’s coverage of President Trump is negative.

Below are the winners of the 2017 Fake News Awards.

1. The New York Times’ Paul Krugman claimed on the day of President Trump’s historic, landslide victory that the economy would never recover.


2. ABC News’ Brian Ross CHOKES and sends markets in a downward spiral with false report.



3. CNN FALSELY reported that candidate Donald Trump and his son Donald J. Trump, Jr. had access to hacked documents from WikiLeaks.


(via Fox News)
4. TIME FALSELY reported that President Trump removed a bust of Martin Luther King, Jr. from the Oval Office.


5. Washington Post FALSELY reported the President’s massive sold-out rally in Pensacola, Florida was empty. Dishonest reporter showed picture of empty arena HOURS before crowd started pouring in.

View image on TwitterView image on TwitterView image on TwitterView image on Twitter

.@DaveWeigel @WashingtonPost put out a phony photo of an empty arena hours before I arrived @ the venue, w/ thousands of people outside, on their way in. Real photos now shown as I spoke. Packed house, many people unable to get in. Demand apology & retraction from FAKE NEWS WaPo!

6. CNN FALSELY edited a video to make it appear President Trump defiantly overfed fish during a visit with the Japanese prime minister. Japanese prime minister actually led the way with the feeding.


7. CNN FALSELY reported about Anthony Scaramucci’s meeting with a Russian, but retracted it due to a “significant breakdown in process.”


(via washingtonpost.com)

8. Newsweek FALSELY reported that Polish First Lady Agata Kornhauser-Duda did not shake President Trump’s hand.


9. CNN FALSELY reported that former FBI Director James Comey would dispute President Trump’s claim that he was told he is not under investigation.

10. The New York Times FALSELY claimed on the front page that the Trump administration had hidden a climate report.


(via WashingtonPost.com)

11. And last, but not least: “RUSSIA COLLUSION!” Russian collusion is perhaps the greatest hoax perpetrated on the American people. THERE IS NO COLLUSION!

Well, now that collusion with Russia is proving to be a total hoax and the only collusion is with Hillary Clinton and the FBI/Russia, the Fake News Media (Mainstream) and this phony new book are hitting out at every new front imaginable. They should try winning an election. Sad!

While the media spent 90% of the time focused on negative coverage or fake news, the President has been getting results:

1. The economy has created nearly 2 million jobs and gained over $8 trillion in wealth since the President’s inauguration.

2. African Americans and Hispanics are enjoying the lowest unemployment rate in recorded history.

3. The President signed historic tax cuts and relief for hardworking Americans not seen since President Reagan.

4. President Trump’s plan to cut regulations has exceeded “2 out for every 1 in” mandate, issuing 22 deregulatory actions for every one new regulatory action.

5. The President has unleashed an American energy boom by ending Obama-era regulations, approving the Keystone pipeline, auctioning off millions of new acres for energy exploration, and opening up ANWR.

6. ISIS is in retreat, having been crushed in Iraq and Syria.

7. President Trump followed through on his promise to recognize Jerusalem as the capital of the State of Israel and instructed the State Department to begin to relocate the Embassy.

8. With President Trump’s encouragement, more member nations are paying their fair share for the common defense in the NATO alliance.

9. Signed the Veterans Accountability and Whistleblower Protection Act to allow senior officials in the VA to fire failing employees and establishes safeguards to protect whistleblowers.

10. President Trump kept his promise and appointed Associate Justice Neil Gorsuch to the U.S. Supreme Court.

Read More: https://gop.com/the-highly-anticipated-2017-fake-news-awards/

What Happens When A Russiagate Skeptic Debates A Professional Russiagater

Have you ever wondered why mainstream media outlets, despite being so fond of dramatic panel debates on other hot-button issues, never have critics of the Russiagate narrative on to debate those who advance it? Well, in a recent Real News interview we received an extremely clear answer to that question, and it was so epic it deserves its own article.

Real News host and producer Aaron Maté has recently emerged as one of the most articulate critics of the establishment Russia narrative and the Trump-Russia conspiracy theory, and has published in The Nation some of the clearest arguments against both that I’ve yet seen. Luke Harding is a journalist for The Guardian where he has been writing prolifically in promotion of the Russiagate narrative, and is the author of New York Times bestseller Collusion: Secret Meetings, Dirty Money, and How Russia Helped Donald Trump Win.

In theory, it would be hard to find two journalists more qualified to debate each side of this important issue. In practice, it was a one-sided thrashing that The Intercept’s Jeremy Scahill accurately described as “brutal”.

The term Gish gallop, named after a Young Earth creationist who was notoriously fond of employing it, refers to a fallacious debate tactic in which a bunch of individually weak arguments are strung together in rapid-fire succession in order to create the illusion of a solid argument and overwhelm the opposition’s ability to refute them all in the time allotted. Throughout the discussion the Gish gallop appeared to be the only tool that Luke Harding brought to the table, firing out a deluge of feeble and unsubstantiated arguments only to be stopped over and over again by Maté who kept pointing out when Harding was making a false or fallacious claim.

In this part here, for example, the following exchange takes place while Harding is already against the ropes on the back of a previous failed argument. I’m going to type this up so you can clearly see what’s happening here:

Harding: Look, I’m a journalist. I’m a storyteller. I’m not a kind of head of the CIA or the NSA. But what I can tell you is that there have been similar operations in France, most recently when President Macron was elected —
Maté: Well actually Luke that’s not true. That’s straight up not true. After that election the French cyber-intelligence agency came out and said it could have been virtually anybody.
Harding: Yeah. But, if you’ll let me finish, there’ve been attacks on the German parliament —
Maté: Okay, but wait Luke, do you concede that the France hack that you just claimed didn’t happen?
Harding: [pause] What — that it didn’t happen? Sorry?
Maté: Do you concede that the Russian hacking of the French election that you just claimed actually is not true?
Harding: [pause] Well, I mean… that it’s not true? I mean, the French report was inconclusive, but you have to look at this kind of contextually. We’ve seen attacks on other European states as well from Russia, they have very kind of advanced cyber capabilities.
Maté: Where else?
Harding: Well, Estonia. Have you heard of Estonia? It’s a state in the Baltics which was crippled by a massive cyber attack in 2008, which certainly all kind of western European and former eastern European states think was carried out by Moscow. I mean I was in Moscow at the time, when relations between the two countries were extremely bad. This is a kind of ongoing thing. Now you might say, quite legitimately, well the US does the same thing, the UK does the same thing, and I think to a certain extent that is certainly right. I think what was different last year was the attempt to kind of dump this stuff out into kind of US public space and try and influence public opinion there. That’s unusual. And of course that’s a matter of congressional inquiry and something Mueller is looking at too.
Maté: Right. But again, my problem here is that the examples that are frequently presented to substantiate claims of this massive Russian hacking operation around the world prove out to be false. So France as I mentioned; you also mentioned Germany. There was a lot of worry about Russian hacking of the German elections, but it turned out — and there’s plenty of articles since then that have acknowledged this — that actually there was no Russian hack in Germany.

In the above exchange, Maté derailed Harding’s Gish gallop, and Harding actually admonished him for doing so, telling him “let me finish” and attempting to go on listing more flimsy examples to bolster his case as though he hadn’t just begun his Gish gallop with a completely false example.

That’s really all Harding brought to the debate. A bunch of individually weak arguments, the fact that he speaks Russian and has lived in Moscow, and the occasional straw man where he tries to imply that Maté is claiming that Vladimir Putin is an innocent girl scout. Meanwhile Maté just kept patiently dragging the debate back on track over and over again in the most polite obliteration of a man that I have ever witnessed.

The entire interview followed this basic script. Harding makes an unfounded claim, Maté holds him to the fact that it’s unfounded, Harding sputters a bit and tries to zoom things out and point to a bigger-picture analysis of broader trends to distract from the fact that he’d just made an individual claim that was baseless, then winds up implying that Maté is only skeptical of the claims because he hasn’t lived in Russia as Harding has.

The interview ended when Harding once again implied that Maté was only skeptical of the collusion narrative because he’d never been to Russia and seen what a right-wing oppressive government it is, after which the following exchange took place:

Maté: I don’t think I’ve countered anything you’ve said about the state of Vladimir Putin’s Russia. The issue under discussion today has been whether there was collusion, the topic of your book.
Harding: Yeah, but you’re clearly a kind of collusion rejectionist, so I’m not sure what sort of evidence short of Trump and Putin in a sauna together would convince you. Clearly nothing would convince you. But anyway it’s been a pleasure.

At which point Harding abruptly logged off the video chat, leaving Maté to wrap up the show and promote Harding’s book on his own.

You should definitely watch this debate for yourself, and enjoy it, because I will be shocked if we ever see another like it. Harding’s fate will serve as a cautionary tale for the establishment hacks who’ve built their careers advancing the Russiagate conspiracy theory, and it’s highly unlikely that any of them will ever make the mistake of trying to debate anyone of Maté’s caliber again.

The reason Russiagaters speak so often in broad, sweeping terms — saying there are too many suspicious things happening for there not to be a there there, that there’s too much smoke for there not to be fire — is because when you zoom in and focus on any individual part of their conspiracy theory, it falls apart under the slightest amount of critical thinking (or as Harding calls it, “collusion rejectionism”). Russiagate only works if you allow it to remain zoomed out, where the individually weak arguments of this giant Gish gallop fallacy form the appearance of a legitimate argument.

Well, Harding did say he’s a storyteller.

Lacy Hunt on the Unintended Consequences of Federal Reserve Policies

Federal Reserve Logo
The Financial Repression Authority interviewed Lacy Hunt, Chief Economist at Hoisington Management on Fed policies.

The interview below first appeared on the FRA website along with a video. The emphasis in italics is mine.

FRA: Hi, welcome to FRA’s Roundtable Insight. Today, we have Dr. Lacy Hunt. He’s an internationally recognized economist and the Executive V.P. and Chief Economist of Hoisington Investment Management Company, a firm that manages over $4.5 billion USD and specializing in the management of fixed income accounts for large institutional clients. He also served in the past as Senior Economist for the Federal Reserve Bank of Dallas, where he was a member of the Federal Reserve System Committee on Financial Analysis. Welcome. Dr. Hunt.

Dr. Lacy Hunt: Nice to be with you, Richard.

FRA: Great. I thought we’d have a discussion on a variety of topics relating to the economy and the financial markets. You recently mentioned that you thought this was the worst economic expansion recovery in U.S. history since 1790. Wow. Can you elaborate?

Dr. Lacy Hunt: If you calculate the average growth rate in the expansions since 1790, this is a long-running expansion, but it’s the slowest and in the last 10 years the household sector lagged very, very badly. The rate of growth in real disposable household income per-capita is only 0.9 percent per year. And in the last 12 months, we’re up only 0.6 percent per year. So it’s a long-running expansion, but it’s been a poor expansion. There are certainly problems with some of the earlier data, but this appears to be the slowest expansion since the turn of the 18th Century and our households are the main problem for the growth rate lag.

FRA: And do you point a finger for this cause as primarily on the Federal Reserve or do you see structural changes happening to the economy?

Dr. Lacy Hunt: I think that the main element suppressing growth is the heavily leveraged U.S. economy. We have too much public and private debt, and this debt does not generate an income stream for the aggregate economy. As a result of the prolonged indebtedness, which is on the verge of going much higher because of problems in the governmental sector, the economy is now experiencing very poor demographics. We have a baby bust, a household formation bust, and the lowest birth rate since 1937. These demographics are exacerbating the problems because we have too much of the wrong type of debt and thus the velocity of money has been falling since 1997. Velocity this year is only 1.43 percent, which is the lowest since 1949. Furthermore, the debt creates a situation where monetary policy capabilities are asymmetric. In other words, a lot of action is needed to provoke even a muted impact on the economy, whereas the slightest monetary tightening goes a long way in depressing economic activity. So the root cause of this underperformance is extreme indebtedness.

FRA: And what about the Federal Reserve? How has it undermined the economy’s ability to grow?

Dr. Lacy Hunt: The Fed’s most serious mistake was made in the 1990s up until 2006 during which they allowed the private sector to become extremely over-indebted with the wrong type of debt. And, in essence, I think that quantitative easing, through the push for higher stock prices, created more problems than it has solved for the economy. QT caused the corporate executives to switch funds from real capital investments into financial investments through the paying of higher dividends, buying shares of their own companies, and buying back their shares from others. While this type of action does produce a higher stock market; it doesn’t generate a higher standard of living. And so, Federal Reserve policy has not improved the economy, although it certainly has well served components of the economy.

FRA: And due to that do you think that there’s been too much financial investment versus real economy investment in terms of diverting the economic financial resources away from the real economy?

Dr. Lacy Hunt: I think that’s the principal problem. Business debt last year reached a record high relative to GDP. As I said earlier, Fed policies have created a higher stock market but have not generated an improved standard of living. When the Reserve undertook quantitative easing, it was a signal to the corporate executives that the Fed preferred and would protect financial investments. But that meant financial assets were preferred over real side investments. And so QT is intermingling with the growth-depressing effects of too much debt. And the debt levels are getting ready to move substantially higher in our governmental sector. Government debt is already approaching 106 percent of GDP, a record high with the exception of a brief period during World War II. And by 2030, federal debt will be approximately 125 percent of GDP. For a long time, we’ve known about the issues that would inflate the entitlements — such as the prior-mentioned demographic problems — but there is an increasing likelihood that new federal programs with expenditure increases will further accelerate the growth in federal debt. I think there is clear evidence that increases in federal debt at these high levels relative to GDP over any measurable length of time, reduces economic activity. Thus, the multiplier is not a positive but negative figure, or otherwise exactly what economist David Ricardo hypothesized in his 1821 work. I have looked at the relationship between per capita changes in real GDP and government debt per capita and the relationship is negative, not positive. And so, we’re trying to solve an indebtedness problem by taking on more debt. You can get intermittent spurts of economic activity and inflation, but ultimately the debt is a millstone around the economy’s neck.

FRA: So would you say that we have migrated to a sort of financial economy?

Dr. Lacy Hunt: Let me give you a couple of examples. There’s so much liquidity in the financial markets, particularly the stock market, that a lot of the economic news is constructively interpreted even when it’s unconstructive. Virtually the world believes that the United States is experiencing large job gains and the idea that such productivity may be incorrect is hardly considered. But the rate of growth in payroll employment on a 12-month basis peaked at 2.4 percent in early 2015 and for the last 12 months, has sunk to 1.4 percent. What is even more critical — if you look at just the expansions and don’t include the recessions since 1968 – is that the average growth in employment in an expansion year was 1.9 percent. And in the last 12 months, we are half a percentage point under that figure. Yet, given these numbers, there is an erroneous perception that the employment gains are strong. And this view undermines the improvement in the standard of living. And because of the liquidity and the need of some investors to fully participate in the rising stock market, investors tend to overlook other important developments. If we go back to the 12 months ending November of 2015, real average hourly earnings were up about 2.5 percent. And in the latest 12 months, real average hourly earnings gained a miniscule 0.2 percent. The liquidity tends to push the focus away from the more realistic interpretation of the economy for certain types of assets.

However, the weak performance overall and the deceleration in some of the indicators that I just referred to is not unnoticed by the bond market. So, we have a dichotomy in which the stock market is strongly up but the long-term bond yields are down. Now, the short-term yields are up because they are under the control or heavy influence of the Federal Reserve. The Federal Reserve is in the process of raising the short-term rates and winding down their portfolio. They sold 20 billion dollars of government agency securities in October and November, pushing up the short-term rates. Erstwhile, the long-term rates — which look at some of the more important economic fundamentals — are actually declining.

Another element not in the public understanding, since the Federal Reserve no longer produces this sort of monetary analysis, is a very sharp slowdown in the money supply’s rate of growth, bank loans, and within important credit aggregates. Last year, the M2 money supply was up 7 percent. In the latest 12 months, it decelerated to less than 4.5 percent. The rate of growth in bank loans and commercial paper, which topped out on a 12- month basis about 9 percent, is now under 4 percent. So the Fed is raising the short-term rates, reducing the monetary base, and causing a tightening in the financial side of the economy. Some investors understand what is happening and yet it’s not in the general psyche because such monetary analysis is increasingly rare.

However, another more public indicator is the very dramatic flattening of the yield curve. And when the yield curve flattens in such a way, first of all, it’s a symptom that monetary restraint is beginning to bite. Now, the slowdown in money supply growth and the bank credit flattening of the yield curve will occur well before there is any noticeable impact on a broad array of economic indicators or long lags in monetary policy. But when the yield curve starts flattening, that intensifies the effect of the monetary tightening because it takes away or, at the very least, greatly reduces the profitability of the banks and all those that act like banks. Banks make a profit by borrowing short and lending long. When those spreads recede, bank profitability is hurt, particularly for the higher, riskier types of bank loans since not enough spread exists to cover the risk premium. So the banks begin to pull back, further intensifying the restraint pressing on economic growth. To the vast majority of investors, we have an economy that is apparently doing well, but in fact there are elements right beneath the surface that strongly suggest to me that the outlook for 2018 is considerably more guarded than conventional wisdom implies.

FRA: And do you see the potential for an inverted yield curve in the near future?

Dr. Lacy Hunt: I’m not sure that we will have to invert because the economy is so heavily indebted and the velocity of money is its lowest since 1949. Now, a number of people have pointed out that we typically invert before a recession and historically such inversions have been the case most of the time — but not always if you go back far enough in time — and you should since this is not a normal economy. For example, money supply growth since 1900 has averaged about 7 percent per annum, whereas, currently, the rate of growth in M2 is about 36 percent below the long-term average, indicating a very weak growth rate. And the velocity of money is lower than all of the years since 1942 — with the exception of 7 years — and the economy has never been this heavily indebted. And so the yield curve could possibly approach inversion, but it may or may not occur or stay there very long because at that stage of the game, the flattening of the yield curve will greatly intensify all the other effects — the reduction in the reserve, monetary, and credit aggregates, as well as the weakness in velocity. And when this reduction becomes apparent, the Federal Reserve will not be able to reverse gears quickly enough to ameliorate the impact produced upon future economic growth.

FRA: So do you still see a secular low in bond yields on the long into the yield curve remaining in the future sometime?

Dr. Lacy Hunt: The lows have not been seen. The path there will remain extremely volatile. We will have episodes in which the long yields rise. My attitude is that the long yields can go up over the short run for any number of causes. While many elements work out of the system in the long end, yields cannot stay up. When yields go up — especially now that the yield curve is flattening — this intensifies monetary restraint, which puts downward pressure on commodities. This puts upward pressure on the value of the dollar and cuts back on the lending operations. Something I think has been somewhat overlooked in general euphoria over the strength of economic indicators, is the that commercial and industrial loans for all of the banks in the United States are now only up one-tenth of one percent in the last 12 months. There are forward-looking elements that have historically been very important for signaling that change is ahead. They don’t tell us the timing — timing is always difficult — but they are flashing signals that should be observed.

FRA: And as this plays out, do you see monetary policy and fiscal policy is changing, like will we get fiscal policy stimulus? Will there be a change in monetary policy and how will that look like?

Dr. Lacy Hunt: Here’s my attitude: the new federal initiatives, whether tax cuts or infrastructure or otherwise will not provide a boost to the economy if they are funded with increases in debt — that’s where we’re at. And by the way, it’s been that way for some time. If you go back to 2009, we had a one-trillion-dollar stimulus package that was said to be inflationary and was going to boost economic growth, but yet we still had this very poor expansion and little inflation except for intermittent bouts here and there, largely from highly-priced inelastic goods. All the while, the inflation rate has trended lower.

For example, when President Reagan cut taxes, government debt was 31 percent of GDP and now that’s 106 percent on its way to 120-125 percent. And so if you go back and if you read Ricardo’s great article in 1821, he was asked whether it made a difference as to whether the Napoleonic wars were financed by taxes or by borrowing. Ricardo said that, theoretically, either way private sector activity was going to be suppressed. Now we have a lot of evidence, including some that I produced, that the government multiplier is negative, not positive, over a three-year period. Thus, the tax cuts may work for a very short while, but not on balance. And if the tax cuts were revenue-neutral and financed by reductions in government expenditures that would be a positive since the evidence shows tax multipliers are more favorable than expenditure multipliers. Such a theoretical proposal would provide greater efficiency for private sector spending and government spending. There’s also evidence that you would lower the cost of capital, but that’s not what we’re talking about is it? We’re talking about a debt-financed tax cut and we’re not talking about a revenue-neutral infrastructure plan, just as we were not talking about a revenue-neutral stimulus package in 2009. We’re talking about the debt-financed variety of tax cuts and at this stage of the game, this will make us more vulnerable, except for a few fleeting instances.

I will say this: when you have a debt-financed infrastructure program or tax cut, there will be pockets within the economy that will benefit, but the aggregate economic performance will not benefit and so fiscal policy, as I see it, is not really going to be helpful. The risk is that the debt buildup will add to the problems. There is extensive academic research indicating that when government debt rises above 90 percent of GDP for more than five years, this trend will reduce the economy’s growth rate by a third. Remember, we’re at 106 percent debt to GDP and there’s evidence these higher levels of debt have a non-linear effect. In other words, we use up growth at a faster pace. And there’s a lot of evidence from the available data that we’re even losing a half of our growth rate from the trend. For example, GDP has risen at 2.1 percent per capita since 1790. The latest 10 years produced a reduction to 1.0 percent. And so we should have lost only seven-tenths or come down at 1.3 over 1 but we didn’t and this is a consequence that we have to deal with. We’re not in a position to ignore the debt levels. Fiscal policy can be talked about, we can debate about it, and we can proclaim its benefits, but I don’t see them in the current environment just as I didn’t see them in 2009. I would change my tune if they were revenue-neutral, but that’s not the issue here.

To me, inflation is a money-price-wage spiral not a wage-price spiral as with the Phillips curve. The way inflations begin is by money supply growth acceleration not being offset by weakness in velocity, which shifts the aggregate demand curve inward. Remember, the aggregate demand curve is equal to money times the velocity by algebraic substitution as evidenced in all the leading textbooks on macroeconomics. So you have declines in the money supply and velocity, which will make the aggregate demand curve shift inward over time. This shift gives you a lower price level and a lower level of real GDP. It doesn’t happen every quarter or even every year, but it’s the basic trend. Thus, monetary policy is in the process not of decelerating money supply growth and by a significant amount. If the Fed adheres to their schedule of quantitative tightening, I calculate M2 will grow by the end of the first quarter – it’s currently running around four and a half percent – and the year over year growth rate will be down to less than 3 percent. And so monetary policy is taking steps to lower the reserve monetary and credit aggregates, and these actions will further flatten the curve because they can press the short rates upward. But I think the long-term investors will understand that the inflationary prospects on a fundamental basis are weakening not strengthening.

FRA: And do you see these trends as being exacerbated on the emerging government pension fund crisis? Could there be more debt used to solve that like for bailouts? Do you see that potentially happening?

Dr. Lacy Hunt: Well the main problem with government debt is that we’re going to have approximately one million folks a year reach age 70 in the next 14 to 15 years and we’ve known that this was coming, but we didn’t prepare for it. We’ve made a lot of promises under Social Security Medicare and the Affordable Care Act and government debt will have to be used to fund the entitlement benefits — I don’t see any other way around it. Another overlooked problem is that the actual federal fiscal situation is much worse than these surface numbers. For example, in the last three years, the budget deficit worsened each year. If you sum the budget deficits for 2015, 2016 and 2017, the sum is 1.2 trillion, but a lot of what was previously called “outlays” have been moved off budget — we call them investments (such as student loans) and there are other examples. The actual increase in federal debt in the last three years is 3.2 trillion. So the budget deficit is actually greatly understating what is happening to the level of federal debt which wasn’t always the case. Furthermore, the deficit was made worse by a 2015 bipartisan deal between Congress and the White House. And while neither party is blameless — they both agreed on the deal — yet it doesn’t change the fact that the federal situation is deteriorating and at a much worse rate than the deficit numbers themselves indicate.

FRA: And what about for state and local jurisdiction locales, in terms of their government pension funds? Could there be federal level bailouts at that level?

Dr. Lacy Hunt: Again, what are they going to bail them out with? You’re going to have to sell Federal Securities. And one of the multipliers on new sales of Federal debt is negative, not positive. Forget what was taught you in your macroeconomic class 30, 20, or even 15 years ago. When I was in graduate school, I was taught that the government multiplier was somewhere between four and five percent. Now, it looks like the multiplier is at best zero and even possibly slightly negative.

FRA: Great insight as always. How can our listeners learn more about your work, Dr. Hunt?

Dr. Lacy Hunt: We put out a quarterly letter as a public service. Write to us at hoisingtonmgt.com and we’ll put your name on the subscription list. We don’t spam you with marketing so please go ahead and subscribe.

FRA: Okay, great. Thank you very much for being on the Program, Dr. Hunt. Thank you.

Dr. Lacy Hunt: My pleasure Richard. Nice to be with you

Economics as Taught

Note Lacy’s comments on what he learned in graduate school. Lacy once told me that he had to “unlearn” nearly everything he was taught in school about economic.

Multiple generations of economists have been trained to believe inflation is a good thing, saving is bad, that there are no consequences for piling up debt.

Read More: https://www.themaven.net/mishtalk/economics/lacy-hunt-on-the-unintended-consequences-of-federal-reserve-policies-pkS9lRO0dUuFbK-J0ONqCQ