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Off the Cuff: Our Culture Is Failing Us

We look more & more like a civilization in decline
Thursday, April 23, 2015, 10:15 PM

In this week's Off the Cuff podcast, Chris and Charles Hugh Smith discuss:

  • Broken Markets
    • When all signals are false, how does one invest wisely?
  • The Decline Of Culture
    • A fundamental crisis within Western society
  • The Decline Of Civilization
    • We are on a track to repeat history, and not in a good way
  • Crafting A New Narrative
    • What should a more functional society aspire to?
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Deluding Ourselves

The theater of the absurd visits the EIA
Monday, April 20, 2015, 5:50 PM

Once you understand the role of oil, you cannot walk around or travel anywhere without seeing its massive impact on our lives.  Whether it’s the year-round abundance in our grocery stores or it’s the endless traffic jams in every city across the globe, every single day of the year, you see oil’s effect in and on our collective lives. » Read more

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The Future Of Interest Rates

The Fed faces an increasingly bad set of options
Friday, April 17, 2015, 3:36 PM

Executive Summary

  • Why the Fed may no be able to raise rates from here
  • Will the Fed go to negative interest rates instead?
  • Why the next recession will limit the Fed's options greatly
  • Why it may well be too late for the Fed at this point to act

If you have not yet read Part 1: Has The Fed Already Lost? available free to all readers, please click here to read it first.

What If The Fed Isn't Actually Able To Raise Rates From Here?

Let’s start with a look at the history of the Federal Funds rate (the shortest maturity interest rate the Fed directly controls).  Alongside the historical rhythm of the Funds rate are official US recession periods in the shaded blue bars.   

Chart Source:  St. Louis Federal Reserve

Of course there is one striking and completely consistent historical commonality in the behavior of the Funds rate over time.  The Fed has lowered the Federal Funds rate in every recession since 1954 at least.  There are no exceptions.  You can see the punchline coming, can’t you?  Just how does one lower interest rates from zero to stimulate a potential slowdown in the economy?

Of course in the banking system... » Read more

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Off the Cuff: Hot Money, Cold Econony

Global capital is fleeing Asia, while US GDP stagnates
Thursday, April 16, 2015, 2:28 PM

In this week's Off the Cuff podcast, Chris and Brain Pretti discuss:

  • Global Capital Flows
    • The hot money is fleeing Asia and inflating Western assets
  • What Recovery?
    • GDP growth appears to be returning to 0%
  • What Will Happen When The Fed Raises Rates
    • Or better put: can it raise rates without destroying the economy?
  • Lack Of Competent Leaders
    • Those making the big decisions are not the ones we want making them
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Ocean Acidification: An Ecological Nightmare

A far as global crises go, it's a doozy
Monday, April 13, 2015, 9:10 PM

The oceans are facing numerous difficulties including pollution (especially from farm run off), over-fishing, and dragnet methods that ruin innumerable other things besides the targeted catch -- but all of that pales in comparison to the problem of ocean acidification. » Read more

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Off the Cuff: That Sinking Feeling...

The multiplying signs that we await a rude date with destiny
Friday, April 10, 2015, 4:24 PM

In this week's Off the Cuff podcast, Chris and John Rubino discuss:

  • The Police State
    • Too much evidence to ignore
  • How Low Can Interest Rates Go?
    • Looking for the limits to NIRP
  • That Sinking Feeling....
    • Why the next economic bust is going to be just horrible
  • Oil
    • What the heck is going on in that market?
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The Future of Money

Which new systems will rise from the ashes?
Thursday, April 9, 2015, 2:02 PM

Executive Summary

  • Money functions as a store of value and a means of exchange, but it's possible to have 2 forms (or more) of money simultaneously serving as each
  • Having complementary forms of money can provide more resilience to a monetary system - history has a number of examples of this
  • A key success factor of such systems is that the forms of money are NOT issues and controlled by the State
  • Which new forms of money will arise when the current State fiat money regimes fail

If you have not yet read Part 1: The Fatal Flaw Of Centrally-Issued Money available free to all readers, please click here to read it first.

Separating Money’s Two Functions

Money has two basic functions: it is a store of value (that is, it holds its purchasing power long after you obtain it in trade for goods and services) and it is a means of exchange: there has to be enough in circulation to grease the exchange of goods and services.

Though we are accustomed to one form of money playing both of these roles, there is no reason why each function can’t be served by separate kinds of money—that is, one for exchange and one as a store of value.

This is precisely what we find in the historical record, where bills of exchange, letters of credit (in essence, credit money), paper chits from retailers and other ephemeral means of exchange greased trade while gold and silver or other scarce materials served as stores of value.

As anthropologist David Graeber established in his book Debt: The First 5,000 Years, money arose not from barter—the usual assumption—but from the rise of credit-based exchange and debt recorded on clay tablets, notched sticks or parchment.

In Graeber’s view, the key feature of money used for exchange is that it always has an end buyer.  The intrinsically worthless chit issued by a retailer can serve as money through dozens of transactions because everyone trusts that the issuer—the retailer—will accept the chit as being worth an established amount of goods, i.e. purchasing power.

If Joe’s Market issues a chit that can be traded for a can of beans, you and I can exchange that chit as payment of debt or purchase of some other good or service because we know we can always exchange the chit for a can of beans.  The chit serves as money.

When gold and silver were scarce in... » Read more

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The Fed Is Destroying the World One Saver At A Time

Bernanke's new blog offers bloviating proof of that
Tuesday, April 7, 2015, 12:25 AM

I must confess to a deep-seated anger at just how insultingly stupid the world has become. As a sufferer of crisis fatigue I can be caught exclaiming You have got to be kidding me!!? several times per day, or perhaps shouting How dumb do they think we are?

Three choice outbursts came last week as I read Bernanke’s new blog and came across statements like this one:

 

 

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Off the Cuff: The Great Global Economic Slowdown

Growth is slowing down everywhere
Friday, April 3, 2015, 1:57 AM

In this week's Off the Cuff podcast, Chris and Mish Shedlock discuss:

  • Economic Slowdown
    • Economic growth is fast disappearing all across the world
  • The Evils Of The Banking System
    • Corrupt & corrupted; we need a return to old-school fiduciary stewardship
  • Chicago Blues
    • A case study for the fraud & rot soon to appear in cities across the US
  • Fracking's Legacy
    • From poisoned water tables to earthquakes
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What Systemic Breakdown Will Look Like

And how to prepare for it
Thursday, April 2, 2015, 12:20 PM

Executive Summary

  • The real (and growing) risk of one or several systemic breakdowns
  • What to expect during a breakdown of our
    • Economy
    • Energy systems
    • Environmental systems
  • The importance of intelligent stewardship, and focusing on controlling the variable you can

If you have not yet read Part 1: If We're Going To Borrow Against The Future, Let's Borrow To Invest available free to all readers, please click here to read it first.

But what if don’t invest in our future as outlined in part I?  What if the powers that be and system-wide inertia combine to simply deliver us more of the same going forward? 

What if we simply have a profound failure of leadership and none of that good stuff happens, and the next round(s) of QE simply fatten up the trading profits of large banks and hedge funds?

One sign you’ll have that we’re headed nowhere fast in the US is if the next election for president involves a Bush and a Clinton.  That will be a choice between status quo option A and status quo option B, which is no choice at all.

As Winston Churchill said about Americans, you can always count on them to do the right thing…after they’ve tried everything else. 

Unfortunately, we don’t have time in this story to try everything else first and if we don’t do things differently, then I see no other outcome besides a huge, systemic breakdown occurring across... » Read more