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Daily Digest 12/9 - Trump's Bait And Switch, Gold vs. Dollar Devaluations

Friday, December 9, 2016, 2:31 PM

Economy

The March of the Billionaires: On Trump’s Bait and Switch (Don R.)

Given his cabinet picks so far, it’s reasonable to assume that The Donald finds hanging out with anyone who isn’t a billionaire (or at least a multimillionaire) a drag. What would there be to talk about if you left the Machiavellian class and its exploits for the company of the sort of normal folk you can rouse at a rally? It’s been a month since the election and here’s what’s clear: crony capitalism, the kind that festers and grows when offered public support in its search for private profits, is the order of the day among Donald Trump’s cabinet picks.

How To Save For Retirement (reflector, satire)

Remove extraneous expenses from your superfluous lifestyle by adopting the sparse, contemplative life of a Theravada Buddhist monk.

Washington Post admits article on ‘Russian propaganda’ & ‘fake news’ based on sham research (lambertad)

“If the site is flagrantly false with respect to things that can be checked, why pray tell did the Washington Post and its fellow useful idiots in the mainstream media validate and amplify its message? Strong claims demand strong proofs, yet the Post appeared content to give a megaphone to people who make stuff up with abandon. No wonder the members of PropOrNot hide as much as they can about what they are up to; more transparency would expose their work to be a tissue of lies.”

Top Hedge Funds Predict How It All Will End (pinecarr)

For instance, the Bank of England is buying the debt of firms it deems make “a material contribution” to the U.K. economy. That has led some investment banks and companies to create new debt especially for it to buy. The ECB has bought €48.2 billion ($51.2 billion) of corporate debt since June, but the hoped-for private-sector investment hasn’t materialized.

“What does a market do? It’s a voting mechanism,” said Michael Hintze, billionaire founder of hedge fund CQS, which runs around $12 billion in assets. “Instead you’ve got this 800-pound gorilla out there who’s hoovering up assets. “There’s a misallocation of capital and an opportunity cost to the real economy,” added Mr. Hintze, whose portfolio is up 30% this year, ranking it one of the world’s top-performing hedge funds. “It means GDP is not growing as much as it might.”

Intake (jdargis)

A state-funded 2011 report on one Chicago hospital found “woefully inadequate” staffing levels, a “repeated and willful failure by UHS officials to ensure that their staff were properly trained,” and a pattern of admitting more patients than it had room for “in an effort to maximize financial profit.” Investigators also flagged broader concerns, citing “troubling reports suggesting a pattern of quality of care issues, harm to patients, or major healthcare fraud charges involving UHS-operating facilities in a dozen other states.”

Gold Versus Dollar Devaluations (GE Christenson)

The reserve currency status of the dollar is vulnerable. The euro and the pound are weak but eventually the miserable fundamentals for the dollar will manifest as a weaker dollar versus most other fiat currencies. Confidence in the U.S. government and the dollar could weaken considerably.

Crude Rises Ahead Of Non-OPEC Meeting (Josh O.)

The KRG controls ~550,000 bpd, and has indicated that it doesn't plan to scale back on production. Iraq needs to cut production by 210,000 bpd to meet its OPEC cut quota, but 90 percent of the crude produced in the non-Kurdish controlled areas is operated by international oil companies. The state-run oil company controls some 440,000 bpd of Iraq's production, with 280,000 bpd of this in the south. These fields are the ones that are expected to feel the brunt of the OPEC production cut:

This Kansas farmer fought a government program to keep his farm sustainable. (jdargis)

When Fuller was growing up in the 1960s, his family’s farm had seven cash crops plus cattle, pigs and chickens. In the 1970s, the operation doubled in size, partially with rented acres, and began moving along with the mainstream to corn, soybeans and feedlot cattle. Fuller left his family’s operation and started his own farm in 1981. By the mid 1990s, he managed a combination of 3,200 owned and rented acres, mostly corn and soybeans, and enjoyed good yields.

Gold & Silver

Click to read the PM Daily Market Commentary: 12/8/16

Provided daily by the Peak Prosperity Gold & Silver Group

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14 Comments

reflector's picture
reflector
Status: Gold Member (Offline)
Joined: Aug 20 2011
Posts: 269
demonitization and gold price surge in india

an excellent discussion of the cash situation in india, this helps clarify what is happening and why.

[85] Demonetization Drives Gold to $3000 | Jayant Bhandari

pinecarr's picture
pinecarr
Status: Diamond Member (Offline)
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Posts: 2244
Really interesting discussion, reflector

It is chilling to hear what's happening in India right now, to such a large segment of the world's population.  And then you look at the war on cash here -the push to take large denomination bills out of circulation- and I can't help wonder if it is only a matter of time before we find ourselves in the same boat.  Outside-in.

reflector's picture
reflector
Status: Gold Member (Offline)
Joined: Aug 20 2011
Posts: 269
agreed

i'm a bit nervous about that as well as i have a substantial amount in $100s USD outside the banking system, but i don't think the US will phase out 100s quite that quickly.

yes it's a sad situation, how modi betrayed his people, just suddenly declaring the notes they held to be no longer valid.

the ironic thing is that he claimed he was fighting corruption, but the effect it had was to increase corruption, as the people had to pay bribes or have their cash laundered to get it into the new rupee bill usable form. only the criminal cartels benefitted from this, while ordinary people suffered.

zh agrees with bhandari, india is returning to a barter standard for the interim:

With 65% of ATMs Nonoperational, Goldman Warns India Is "Returning To Barter System"

http://www.zerohedge.com/news/2016-12-09/65-atms-nonoperational-goldman-...

 

jim sinclair writes:

Modi in all probability has killed himself due to what he has already done to the currency in India. I have a home in India. Having lived there on and off for quite a few years, I can assure you gold is as much a spiritual factor as an economic item to Indians. Modi will not confiscate gold outside of some proven limited tax situations. I see this as misinformation. So does Bloomberg.

If he touched the “Golden Temple” he would start an armed revolution against the state in India, that I assure you of.

http://www.jsmineset.com/2016/12/09/in-the-news-today-2583/

Barnbuilder's picture
Barnbuilder
Status: Bronze Member (Offline)
Joined: May 7 2014
Posts: 76
This Kansas farmer fought a government program to keep his farm

This is starting to catch on with some of the small farming operations around here, but not many and certainly not the big industrial Ag farms. Been doing this on my little couple acres for three years now. I had an area where a construction project caused unavoidably serious soil compaction.  Planting a cover every year of oilseed radish, clovers, rye, etc has made a visible difference in soil tilth and my yields are pretty impressive.  Now I never leave the ground fallow at any time, makes a big difference. Hopefully it will spread.

robie robinson's picture
robie robinson
Status: Diamond Member (Offline)
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Posts: 1182
Best vid

On food https://m.youtube.com/watch?v=MMwhzq0AZwo

drbost's picture
drbost
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Joined: Aug 18 2010
Posts: 63
Reference re: #4

Do you have a link or reference to this material?  I'd like to follow up on it.

Whoops!  Please ignore my question.  I just caught the link in Daily Digest.  

TechGuy's picture
TechGuy
Status: Gold Member (Offline)
Joined: Oct 13 2008
Posts: 415
Re: $100 USD

reflector Wrote:

"i'm a bit nervous about that as well as i have a substantial amount in $100s USD outside the banking system, but i don't think the US will phase out 100s quite that quickly."

Its already happening as most retail businesses in the USA no longer accept Ben Franklin's ($100), Even Grant ($50) is on the endanger list. Retailers are afraid of Theft and fraud.

reflector Wrote:

"The ironic thing is that he claimed he was fighting corruption, but the effect it had was to increase corruption, as the people had to pay bribes or have their cash laundered to get it into the new rupee bill usable form"

Its likley to cause severe devaluation as people will avoid holding any Rupees in fear of further changes. Oddly, Indians might just start using US dollars and Euros.

thatchmo's picture
thatchmo
Status: Gold Member (Offline)
Joined: Dec 14 2008
Posts: 456
bring 'em on!

My business still accepts Franklins ("fun tickets") for purchases, sometimes by the fist-fulls.  I count 'em, but don't look too awfully close at the quality.  Funny thing though, my bank teller mentioned to me Friday to be on the lookout for fake $100 bills.  Claims of huge amounts of fake Bennys in circulation could "demand" that the Treasury call back all $100 bills?  To protect the currency and poor grandma, of course....Aloha, Steve.

thc0655's picture
thc0655
Status: Diamond Member (Offline)
Joined: Apr 27 2010
Posts: 1614
Fake $100's and credit card fraud

I don't know what it's like in other places in the country, but in my city there is very, very little investigation or prosecution of counterfeit currency (of any denomination) and credit card fraud.  The Treasury Department (through the Secret Service) investigates counterfeit currency. When we are called to the scene of counterfeit currency we never make an arrest: we write a report, get good ID on the person who passed it (if they're still on location), and then we take the counterfeits downtown to the Secret Service at the Federal building.  In nearly17 years in the PD, I have never handled such a case myself or heard of another officer's case in which the Secret Service has taken even a superficial interest in the job. The one time I thought they might take an interest was when I arrested a convicted felon carrying a firearm on the street and carrying 87 new $10 bills.  Among those counterfeit bills there were only three serial numbers occurring over and over.  So I figured they might want to investigate that one because the male might have created them himself or got them from whoever did.  Nope.  No interest whatsoever.  For another clue, I learned that currency investigations is generally a not-glamorous assignment usually handed to rookie agents right out of Secret Service school.  And don't get me started on credit card fraud.  Those jobs create at ton of police paper work, but the banks generally can't be bothered with cooperating.  I assume this is because the banks make so much profit that it's no big deal for most cases.  I've heard their threshhold is $100,000: if it's less than that they generally aren't interested.  I've had one such case in my career.

I too have some $100 bills salted away, and I get the tellers to give me the new, more high security bills that businesses never have a problem taking.

robie robinson's picture
robie robinson
Status: Diamond Member (Offline)
Joined: Aug 25 2009
Posts: 1182
Well worn

junk silver, I am a confessing stacker. 90% junk silver will get you a lot of food off our farm.

reflector's picture
reflector
Status: Gold Member (Offline)
Joined: Aug 20 2011
Posts: 269
Re: $100 USD
TechGuy wrote:

Its already happening as most retail businesses in the USA no longer accept Ben Franklin's ($100), Even Grant ($50) is on the endanger list. Retailers are afraid of Theft and fraud.

i haven't run into a problem using the $100s, but most of what i use cash for is buys for my business with trading partners i know well.

and retail is a different scenario than a government policy outlawing $100s, if retailers choose not to accept them, i'm fine with that, that's a business decision by a private entity, i can always deposit them back in the bank instead; it's when the government who claims these FRNs are money goes back on its word and demonetizes suddenly, that it's a problem.

 

TechGuy wrote:

 

Its likley to cause severe devaluation as people will avoid holding any Rupees in fear of further changes. Oddly, Indians might just start using US dollars and Euros.

that was my thought as well, given the lack of cash, why haven't indians started using US dollars, like cambodia or other countries do?

reflector's picture
reflector
Status: Gold Member (Offline)
Joined: Aug 20 2011
Posts: 269
RE: Fake $100's and credit card fraud

thanks for the great info, tom, i'd always believed that us treasury dept is hyper-vigilant about investigating and prosecuting counterfeit currency.

thc0655 wrote:

I too have some $100 bills salted away, and I get the tellers to give me the new, more high security bills that businesses never have a problem taking.

one of my vendors who is vietnamese, before he takes a trip to vietnam, he asks me to pay him in the blue (newer style) $100s; apparently, there is a 3% spread in vietnam between the old us $100s and the new us $100s when you are changing them, because counterfeits of the newer ones are very rare.

 

TechGuy's picture
TechGuy
Status: Gold Member (Offline)
Joined: Oct 13 2008
Posts: 415
Re: Phase out of $100 USD Bills

"i haven't run into a problem using the $100s, but most of what i use cash for is buys for my business with trading partners i know well."

I think it will be a slow process, but over the next ten years $100 bills will become more difficult to exchange. To combat counterfiting, The Treasury will likely frequently change them, which will lead to confusion.

There has also been some discussion in Congress as well as the Big Banks pushing for elimination of the $100. If the US Gov't needs to go to negative interest rate (NIRP) than it will need to make it difficult for people to hord currency, so that thte US banking system isn't drained. I think if the US economy falls hard back into a deep recession or soft depression, Trump will reverse course and adopt NIRP.

 

nickbert's picture
nickbert
Status: Diamond Member (Offline)
Joined: Jan 14 2009
Posts: 1208
Old US bills, foreign banks, and dollars stored overseas

Here in Mongolia there is no spread between the new and old $100 bills, but the banks do seem to have a preference for the new ones.  And they really hate it if you have an old style bill that has any wear on it... just last week they balked a bit when I exchanged one for some local currency, commenting at the tiny bit of fading around the faint crease in the middle of the bill.  I told them it's just an older bill and they eventually relented, but they obviously weren't thrilled about it.  I can't say every country outside the US might be like this, but if you travel abroad it's best to just request newer bills before you travel.

Regarding doing away with the $100 bill, one thing I've been pondering for some time now is how much of its physical cash is used overseas and most of that being the high-denomination bills, and what difficulties that may pose to such a proposal.  I can tell you that here the US $100 bill is a very commonly used way to store and transact with larger amounts of physical cash, and that doesn't show any sign of changing.  I can only imagine the amount of chaos (and inflation perhaps?) that would accompany the massive surge of US dollars flowing back into the US from overseas.  My sense of things is that TPTB would opt to just make $50 and $100 bills less available and put in place withdrawal restrictions rather than do away with them altogether.  Or at least that's what they would try first....

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