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The Secret Deal To Drive The Markets

Central Banks Continue to Fuel A Dangerous Wealth Gap
Monday, March 21, 2016, 4:03 PM

Let’s not kid ourselves anymore; the world’s financial markets are heavily manipulated on a regular, if not daily, basis by central banks and their main clients the Big Banks.

Frustratingly, one vocal group denies that this is case while another actively cheers on the manipulations.  The first group thinks that because in the past markets have been too big for central banks to influence trends for more than a short while that this must still be equally true today. » Read more

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Off The Cuff: Trapped By TINA

Central banks are learning 'There Is No Alternative'
Friday, March 18, 2016, 8:23 PM

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

  • Trapped By TINA
    • Central banks find themselves out of options
  • Under Pressure
    • Those higher up the wage curve are finding themselves struggling more
  • Fear As A Social Control Tool
    • We're being sold it much more than we realize
  • Taking Control
    • A better future will come from our own hands, not those of our leaders
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Outsmarting The Monkey

How to preserve capital through the coming volatility
Friday, March 11, 2016, 3:16 PM

Executive Summary

  • Beware of increasing financial Repression
  • Watch where the global flows of capital are heading
  • Expect further strengthening of the US dollar
  • Realize that cash is not a bad position in an extremely volatile market. Same with precious metals.
  • Why the best opportunities for capital preservation will be local

If you have not yet read The Year of the Red Monkey: Volatility Reigns Supreme, available free to all readers, please click here to read it first.

In Part 1, we looked at the ways fiscal and monetary authorities have attempted to stave off business-cycle washouts, i.e. recessions, and how the fixes have created a global Great Stagnation that is characterized by uncertainty  and volatility.

Here in Part 2, we investigate whether the global economy slide into recession, or will new policies such as capital controls save the day? And more importantly, we look to the asset classes where investors can seek safety from the red monkey's antics.

Capital Controls

The latest fixes being rolled out by central banks and governments are capital controls—essentially, policies designed to force people to spend their saved-up capital in the home country or invest it in whatever the central bank/state deems supportive of the hoped-for exit from the Great Stagnation.

Negative interest rates are a form of capital control: by charging interest on cash held in banks, governments hope to force people to spend their cash rather than “hoard” it.

Since cash currency is a safe haven from this expropriation, governments are actively seeking to eliminate or limit cash.

When private banks are revealed as insolvent, governments can recapitalize the banks by expropriating depositors’ cash held in the bank—“bail-ins.”

Another expropriation idea making the rounds among “serious policymakers” is forcing everyone with retirement savings to put a percentage of this cash in government bonds—in effect, funding state deficit spending by force.

All of these controls are forms of financial repression—limiting the freedom of people and their capital in order to prop up the privileges of a tiny financial and political elite at the top of the status quo.

To the degree that capital controls inevitably spark blowback and unintended consequences, they add to volatility by... » Read more

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Off The Cuff: Are We Entering A New Bull Market For Gold?

Likely, though risk of a short term pull-back is high
Friday, March 11, 2016, 12:30 AM

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

  •  Has A New Bull Market In Gold Begun?
    • Maybe, though a short term pull-back is likely
  • Has Oil Bottomed?
    • Much harder to tell
  • Electric Cars
    • How long may it really take for them to reach mainstream penetration?
  • How Bad Will The Next Market Crash Be?
    • Very bad. This next one's for all the marbles.
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Broken Signals

Prices are so distorted, we're blind in these "markets""
Tuesday, March 8, 2016, 10:50 AM

Prices matter. Or at least, they should

They tell us about the relative value of things, and provide indication of scarcity or abundance.

Sadly, we don't have good prices anymore because the markets have been so heavily dominated by hot money speculators. » Read more

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Off The Cuff: Rage Against The Machine

The electorate is beginning to reject the establishment
Friday, March 4, 2016, 2:27 AM

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

  • Rage Against The Machine
    • A populist revolt may be brewing
  • Stagnation vs Recession?
    • Will the true economy please show itself?
  • Payroll Bingo
    • What will the number be?
  • Losing Control
    • Why outsiders are more popular than expected
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Why I’m Now Short The US Equity Markets

After 7 long years of waiting...
Tuesday, March 1, 2016, 12:55 AM

In the interests of full disclosure and of keeping you abreast of my personal investment actions, I entered a short position on Friday for the first time since 2009. Yes, it’s been seven years.

The equity markets have been all but bulletproof for 6 years, but I think that phase has ended and we’re in for a rough ride from here on out.  At least until stocks fall far enough for the central banks to have another go at attempting to print up prosperity.

First, I think that the stock rally of late is overdone and there’s more downside to come.  I have a whole host of supporting reasons based on credit markets and global trade, but we’ll get... » Read more

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Off The Cuff: Widowmaker Markets

Even the insiders can't make a buck these days
Sunday, February 28, 2016, 3:24 PM

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

  • Widowmaker Markets
    • Even the hedge funds can't make a buck now
  • End Of The Policy Road
    • There's no policy that can fix the banks at this point
  • The War On Cash
    • A clear sign of increasing financial repression
  • The Fall Of Europe
    • The EU is failing before our eyes
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Triggers Of The Coming Social Disorder

What to expect as the central State is increasingly resisted
Friday, February 26, 2016, 11:48 AM

Executive Summary

  • Why revolutions start in the middle-class
  • How social disorder and new narratives are critical ingredients to regime change
  • How the central State will react to being challenged
  • Why the inevitable outcome of class conflict is an increasingly unstable social/economic order

If you have not yet read How The Seeds Of Revolution Take Root, available free to all readers, please click here to read it first.

In Part 1, we surveyed three conventional models the sources of social disorder/revolution and focused on the under-appreciated model of suppressed social mobility.

In this Part 2, we examine the other half of this dynamic: the systemic misalignment of aspirations and opportunities.

The Wellspring of Revolution: An Aspirational Middle Class

One of the great ironies of Marx's historical blueprint for revolution is that revolutionary leaders don't arise from the peasantry or proletariat as he anticipated but from a middle class with aspirations and expectations that are unfulfilled by the status quo--in other words, a society with low social mobility.

Marx was born into a wealthy middle-class family in Trier in the Prussian Rhineland (now Germany), and studied at the universities of Bonn and Berlin at a time when only the elite attended university.

Lenin was born into a wealthy middle-class family in Simbirsk, Russia. His interest in revolutionary socialist politics was sparked by his brother's execution in 1887. He was expelled from Kazan State University for participating in protests.

Mao Zedong was the son of a wealthy farmer in Shaoshan, Hunan. Influenced by the events of the Xinhai Revolution of 1911 and May Fourth Movement of 1919, Mao converted to Marxism–Leninism while working at Peking University.

The building blocks of revolution are visible in each case: a middle-class upbringing of aspirations and higher education, and a grave injustice or movement aimed at rectifying social/economic/political injustice that acts as a trigger for revolutionary fervor and commitment.

The dynamic of revolution is coiled around the psychology of... » Read more

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Off The Cuff: The Coming Capital Controls

Dan Amerman lists the many ways we will get fleeced
Friday, February 19, 2016, 5:52 PM

In this week's Off The Cuff podcast, Chris and Daniel Amerman discuss:

  • The Wide Extent Of Central Bank Intervention
    • And the resulting Franken""markets""
  • The Coming Era Of Capital Controls
    • The war on our money is just getting started
  • Don't Underestimate The Incompetence Of Our Leaders
    • Central banks are more stupid than evil
  • Political Risk To The Markets Is Greater Than We Realize
    • It's the trigger everyone is discounting