Seeking Alpha

theyenguy's  Instablog

theyenguy
Send Message
I am not an investment professional. I do not engage in stock or currency trading. I am a blogger and investor who believes the failure of credit has created an investment demand for gold, and that gold bullion is the sole means of wealth preservation.
My company:
Economic Review Journal
My blog:
EconomicReview Journal
View theyenguy's Instablogs on:
  • Both Stocks And Credit Both Blast Higher Driving The Interest Rate On The US Ten Year Note Lower To 2.75%, As An ECB Official Said The European Central Bank Is Seriously Considering Negative Interest Rates

    The impetus for the February 2014 comes from the Austrian economist Mike Mish Shedlock report who wrote very critically ECB seriously considering negative interest rates. Via translation from El Economista, please consider Coeuré Benoit, a member of the European Central Bank government, said today that the ECB is 'seriously' considering negative interest rates.

    Mario Draghi has repeatedly recognized that there is a debate within the ECB on the pros and cons of negative rates that would seek to force banks to lend. Forcing capital impaired banks to lend is blatantly stupid. The expected result is higher losses.

    The revelation blasted both stocks and credit higher, driving the Interest Rate on the US Ten Year Note, ^TNX, lower to 2.71%.

    1) ... Since February 1, 2014, credit investments had been losing value, as the bond vigilantes have been calling the Benchmark Interest Rate, ^TNX, higher from 2.67%; but that rate traded lower to close at 2.71%, on February 17, 2014, with the result that credit investments seen in the ongoing Yahoo Finance Chart of ORNAX, FAGIX, JNK, HYMB, BWX, and AGG; as well as other credit investments, as is seen in the ongoing Yahoo Finance Chart of SHY, PICB, LQD, and GOVT, traded higher.

    2) ... The rally in equity investments, specifically World Stocks, VT, Nation Investment, EFA, and Global Financials, IXG, that commenced on February 3, 2014, continued higher, largely on a falling US Dollar, $USD,UUP, and a strengthening Euro, FXE, which closed at 135.92, and a awesomely stronger British Pound Sterling, FXB, which close at 164.28; this being seen in a number of equity investment charts such as,

    the ongoing Yahoo Finance Chart of Financials, IXG, KRE, EUFN, RWW, IAI,

    the ongoing Yahoo Finance Chart of Social Risk Sectors, IBB, BJK, SOCL, FDN, PNQI, PBS, PJP, PPA,

    the ongoing Yahoo Finance Chart of Manufacturing Risk Sectors, FXR, RZV, PSCI, FPX, CSD,, XTN, GEX, RZG, IGN,

    the ongoing Yahoo Finance Chart of Eurozone, EZU, Nations EWO, EWI, GERJ, EWN, EIRL, EWP, PGAL, GREK,

    the ongoing Yahoo Finance Chart of the Most Toxic Nation Investments, ARGT, IDXJ, KROO, CAF, EWUS, VNM, EGPT, GULF, EDEN,

    the ongoing Yahoo Finance Chart of Global Growth And Trade Sectors, SOXX, TAN, PICK, FLM, SLX, WOOD, IHI, MHK, CARZ,

    the ongoing Yahoo Finance Chart of Consumer Sectors, XLY, RXI, IYC, PBJ, PSCC, XRT, KXI, PSCD. Of note Bloomberg reports Sales at US Retailers Decline by Most Since 2012: Economy Bloomberg and the Washington Post reports Cold snap continues for retail sales,

    the ongoing Yahoo Finance Chart of Real Estate Sectors, DRW,TAO, KBWD, KBWY, FNIO, REZ, ROOF, REM,

    the ongoing Yahoo Finance Chart of Yield Bearing Sectors, DTN, DFE, GRID, SEA, FIW, XLU, PSP, KBWD, IST,

    and the ongoing Yahoo Finance Chart of High Yielding Debt, AGG, JNK, BDCS, VCLT, EU, HYXU,

    The chart of the US Dollar, $USD, UUP, shows a close at $80; and that of Gold, $GOLD, which often trades inversely of the former at $1324.

    4) ... There be no more economic tigers. The Celtic Tiger, the Asian Tiger, in fact all tigers are gone; these have been killed off by the extinction event of the rise in the Benchmark Interest Rate, ^TNX, from 2.48% on October 23, 2013, as the singular Beast Regime is effecting coup d etats, establishing regional economic fascism, manifesting in policies of regional economic governance and schemes of totalitarian collectivism.

    Liberalism was based upon nation state governance, supporting liberal economic systems, such as Germany Capitalism, French Municipal Governance Socialism, Greek Clientelism, and banker regime schemes, consisting of credit and carry trade investing establishing the investor and investment choice. Liberalism featured wildcat finance, a Doug Noland term, where bankers waived magic wands of prosperity, providing all kinds of speculative leveraged investment opportunities.

    The world pivoted from the paradigm and age liberalism into that of authoritarianism, with the death of fiat money on October 23, 2013, and the death of fiat wealth on January 22, 2014.

    Destiny is operating and administrative oversight of all thing; it is strongly stimulating investors are derisking out of debt trades and currency carry equity trades, and bond vigilantes are once again calling the Benchmark Interest Rate, ^TNX, higher from 2.67%, forcing investors out of credit investment such as Emerging Market Local Currency Bonds, EMLC, and equity investors out of stock investments, on fears that the world central banks monetary policies have crossed the rubicon of sound monetary policy. These actions of the see-saw destruction of equity investments and credit investments, will increasingly stimulate economic destructionism, in particular economic deflation, thus quickening the introduction of paradigm and age of authoritarianism.

    Bloomberg reports Deflation threat worries G-20 roiled by emerging markets. The Toronto Star writes Why deflation is a central banker's nightmare: Deflation can set off a spiral where, as prices fall, people delay purchases, leading to falling demand, a drop in output and falling wages.

    Forbes reports Forbes explains Venezuela, Argentina Currency Devaluations Hit Consumer Staples Provider PG Expected Sales And Earnings;

    Mike Mish Shedlock writes Italy's prime Minister Letta resigns under pressure; Party backs Renzi; Rise of the Oligarchy; Trial by fire coming up. Automatic Earth writes Coups and Constitutions. ZH posts Meet the Men with the plan behind Italy's bloodless coup. Oligarchy is the intermediary economic phase between liberalism and authoritarianism.

    Under authoritarianism, regional leaders, providing mandates of public private partnerships are the transmission of economic activity, which organize the factors of production, underwrite lending, marshall banking resources, disburse fiscal spending, and appropriate private property for regional security, stability and sustainability, to counteract ever increasing destructionism. Regional economic fascism is the singular economic system, where regionalism asserts that regional property rights and establishes the debt serf and debt serfdom, replacing liberalisms economic systems such as crony capitalism.

    Authoritarianism features technocrats yielding clubs of austerity in wildcat governance where leaders bite, rip, and tear one another apart in order to rise to be the top dog.

    Liberalism's fiat money will increasingly be replaced by authoritarianism's diktat money, and requires oaths on the part of workers as Maud van Gaal of Bloomberg reports "'I swear that I will do my utmost to preserve and enhance confidence in the financial-services industry. So help me God.' The oath, the first of its kind in Europe, became binding on board members of Dutch banks last month as the government sought to rein in an industry with assets more than four times the size of the country's economy. All 90,000 Dutch bank employees must take the pledge, or a non-religious affirmation, starting the second half of this year. They'll be punished should they break new ethical rules, Banking Association Chairman Chris Buijink said."

    Reutersreports Andrea Leadsom MP, co-chair of the Fresh Start Project and the APPG for EU Reform, argues that "The EU needs to understand that if it wants to have a future it needs to appreciate matters of principle, democracy, the right of taxpayers, the rights of sovereign governments."

    Open Europe reports David McAllister, the CDU's lead candidate in the upcoming European elections, argues in a Die Welt Sunday Times interview that, "For the reinforcement of a citizen-friendly and democratically legitimate union, a repatriation of powers to a national level must be possible."

    Authoritarianism's diktat money comes from the Brussels forge and mint of economic mandates. Open Europe relates Die Welt reports that German crafts trades are concerned about the European Commission's plans to facilitate access to skilled professions in all EU member states. The paper cites the President of German Confederation of Skilled Crafts Peter Wollseifer as saying that "the dual training [system] in Germany is endangered by the new plans from Brussels".

    Open Europe blog Telegraph live blog analyse the unexpected triple-dip recession in Finland

    Theo Francis of Across The Curve posts A whiff of economic deflation, According to the WSJ, firms pinched by pressure to hold down their prices, keep a lid on prices, ceasing revenue growth and hindering recovery. Executives from companies as varied as General Electric, Kimberly Clark. and Royal Caribbean Cruises, said some prices slipped in the last three months of the year, sometimes significantly, amid intense competition, weaker demand and pressure from cost-conscious customers. Falling prices for adhesives weighed on Eastman Chemical, cheaper packaged coffee dragged on Starbucks, and "value and discounts" hit McDonald's in the fourth quarter in what the fast food chain called a "street fight" for market share. Xerox. is eyeing acquisitions that can "help us be more competitive on price pressure." Corporate revenues are showing the strain, whether from lower prices, weak demand or a combination of the two.

    RT News reports Violent protests across Bosnia injure 150, as people demand government overhaul. The demonstrations began with a tipping point being controversial privatizations of key local industries, which since 2000 have resulted in eventual bankruptcies, leaving much of the working population unemployed. Bosnia is now considered the poorest country in the whole of the former Yugoslavia. But as protests have spread, so the demands have broadened. The demonstrators are now asking not just for better economic conditions, but for an overhaul of the political system. This has led to a televised address by the Bosnian tripartite government presidency's chairman, Zeljko Komsic. He asks for peace, while taking the blame as politician. "We are responsible for everything ... Nothing good will come from anarchy," he appealed to the country, promising to hold an emergency meeting of the leadership. Prime Minister Nermin Niksic, who held the meeting on Thursday, has recognized the validity of the protesters' complaints, but implored them to refrain from violence. According to non-profit Transparency International, Bosnians experience more corruption than any other Balkan state. A presidential election is scheduled for October.

    Implode-o-Meter reports The uncomfortable truth in china's property market. Via Businessinsider.com The central government faces a dilemma. Rising discontent over house prices is a threat to the social and economic stability the Communist Party uses as justification for its one-party rule. But the real estate sector is also a major economic driver, supporting some 40 other industries and generating about 16 percent of the country's $8.5 trillion GDP. That has been important this year in supporting economic growth, which is expected to droop to a 23-year-low of 7.5 percent this year. And it is a major source of income for local governments, so if the central government clamped down too hard, it would cause problems for city authorities. Credit Bubble Stocks asks What has the dry bulk fleet been carrying?

    The Automatic Earth reports The China Shadow Banking System is equal to 69% of GDP, so shrinking it by just 10% means having to replace 6.9% of GDP. On top of the huge expansion that's been happening in the past 5 years. There's no doubt that the PBoC and the government have scores of economists and other experts trying to figure out how to deal with this without having it blow up in everyone's face, but how do you cure an addict that needs more, not less, all the time? There's only so much methadone that will have an effect on a heroin junkie.

    ZH writes Spot The Real Liquidity Bubble. In this context, the January number is precisely what it appears: the bank's logical response to a liquidity crunch as the Chinese regime finds itself in the same spot that the Fed has been in for the past 5 years - it must keep the monetary spice flowing, or else the party is over. And just like the Fed, and now the BOJ, so too does China not want to deal with the fall out if all it takes to create yet another quarter of increasingly subpar economic growth is another record of funny money conceived out of thin air.

    Bloomberg reports China's imports of copper and iron ore climbed to a record in January as demand increased from buyers who used the commodities as collateral to get credit. Shipments of copper advanced 53% to 536,000 metric tons from a year earlier while purchases of the steelmaking ingredient increased 32% to 86.83 million tons... 'Financing could continue to drive significant imports as China's central bank is unlikely to abandon its tightening bias unless growth disappoints,' said Zijin Cheng, a commodities analyst at Barclays.

    Francisco Marcelino of Bloomberg reports China's trust assets surged 46% in 2013 to a record 10.9 trillion yuan ($1.8 trillion), underscoring investor interest in products that pay more than bank deposits even as default risks mount. About 20 billion yuan of trust products had repayment difficulties in 2012, accounting for 0.27% of the industry's assets at that time, the China Trustee Association said. Asset quality is 'quite sound and systemic risks are impossible' with 9.06 billion yuan of reserves set aside, the association said.

    Raj Chetty, Nathaniel Hendren, Patrick Kline, and Emmanuel Saez ask in Vox.EU What drives social mobility?We begin by showing that upward income mobility is significantly lower in areas with larger African-American populations. However, white individuals in areas with large African-American populations also have lower rates of upward mobility, implying that racial shares matter at the community (rather than individual) level. One mechanism for such a community-level effect of race is segregation. Areas with larger black populations tend to be more segregated by income and race, which could affect both white and black low-income individuals adversely. Indeed, we find a strong negative correlation between standard measures of racial and income segregation and upward mobility. Moreover, we also find that upward mobility is higher in cities with less sprawl, as measured by commute times to work. These findings lead us to identify segregation as the first of five major factors that are strongly correlated with mobility.

    The second factor we explore is inequality. Commuting zones with larger Gini coefficients have less upward mobility, consistent with the "Great Gatsby curve" documented across countries (Krueger 2012, Corak 2013). In contrast, top 1% income shares are not highly correlated with intergenerational mobility both across zones within the US and across countries. Although one cannot draw definitive conclusions from such correlations, they suggest that the factors that erode the middle class hamper intergenerational mobility more than the factors that lead to income growth in the upper tail.

    Third, proxies for the quality of the K-12 school system are also correlated with mobility. Areas with higher test scores (controlling for income levels), lower dropout rates, and smaller class sizes have higher rates of upward mobility. In addition, areas with higher local tax rates, which are predominantly used to finance public schools, have higher rates of mobility.

    Fourth, social capital indices (Putnam 1995) - which are proxies for the strength of social networks and community involvement in an area -- are very strongly correlated with mobility. For instance, high upward mobility areas tend to have higher fractions of religious individuals and greater participation in local civic organizations.

    Finally, the strongest predictors of upward mobility are measures of family structure such as the fraction of single parents in the area. As with race, parents' marital status does not matter purely through its effects at the individual level. Children of married parents also have higher rates of upward mobility if they live in communities with fewer single parents.

    The Detroit News reports Delta to lay off 741 workers at Detroit Metropolitan Airport

    Feb 18 5:41 PM | Link | Comment!
  • The Euro Jumps Higher Taking Eurzone Financials, Nation Investment, Global Financials, And World Stocks Higher, While Aggregate Credit Lower On A Rising Ten Year Interest Rate, As Mario Draghi Dismisses Deflation Threat.

    Market Watch reports Euro jumps as Draghi dismisses deflation threat. The Euro, FXE, rose 1.1%, taking European Financials, EUFN, 3.5%, higher, drawing Nation Investment, EFA, 2.5%, Global Financials, IXG, 1.5%, and World Stocks, VT, 1.5%, higher, the week ending February 7, 2014.

    Eurozone Nations rising included Greece, 7%, Ireland, EIRL, 5%, Spain, EWP, 5%, Portugal, PGAL, 4%, France, EWQ, 4%, Finland, EFNL 4%, Italy, EWI, 3%, Austria, EWO, 3%, Netherlands, EWN, 3%, German Small Caps 3%, Germany, EWG, 2%, Eurozone Stocks, EZU, 3% and Europe Small Dividend Stocks, DFE, 2%.

    Sectors rising included Nasdaq Internet, PNQI 2%, Internet Retail, FDN 2%, Semiconductors, SOXX 1%, Automobiles, CARZ 1%. Yield Bearing Sectors rising included International Utilities, IPU 3%, and Shipping, SEA, 2%.

    The Interest Rate, TNX, rose from this month's low of 2.6% to 2.7%, forcing Aggregate Credit, AGG, US Government Bonds, GOVT, and Ten Year US Government Bonds, TLT, lower from their recent parabolic rises higher.

    Liberalism was characterized by inflationism. In the final phase of liberalism, that is since August 2008 through January 2014, the Fed's balance sheet inflated from $900 BN to $4.1 TN. The speculative leveraged investment community, in providing debt trades and currency carry trades, was the transmission mechanism of economic activity.

    Now investors are derisking out of debt trades and currency carry trades, and bond vigilantes are once again calling the Benchmark Interest Rate, ^TNX, higher from 2.6%, all on fears that the world central banks monetary policies have crossed the rubicon of sound monetary policy. These actions will increasingly stimulate economic destructionism, in particular economic deflation, thus commencing the paradigm and age of authoritarianism. Liberalism's German capitalism, European Socialism, Greek Socialism, and China's Communism are relics of a bygone era of the investor and investment choice.

    Under authoritarianism, regional leaders, providing mandates of public private partnerships are the transmission of economic activity, which organize the factors of production, marshall banking resources, disburse fiscal spending, and appropriate private property for regional security, stability and sustainability, to counteract ever increasing destructionism. Regional economic fascism is the singular economic system, which asserts regional property rights and establishes the debt serf and debt serfdom.

    Liberalism's fiat money will increasingly be replaced by authoritarianism' diktat money, and requires oaths on the part of workers as Maud van Gaal of Bloomberg reports "'I swear that I will do my utmost to preserve and enhance confidence in the financial-services industry. So help me God.' The oath, the first of its kind in Europe, became binding on board members of Dutch banks last month as the government sought to rein in an industry with assets more than four times the size of the country's economy. All 90,000 Dutch bank employees must take the pledge, or a non-religious affirmation, starting the second half of this year. They'll be punished should they break new ethical rules, Banking Association Chairman Chris Buijink said."

    Open Europe relates Die Weltreports that German crafts trades are concerned about the European Commission's plans to facilitate access to skilled professions in all EU member states. The paper cites the President of German Confederation of Skilled Crafts Peter Wollseifer as saying that "the dual training [system] in Germany is endangered by the new plans from Brussels".

    Open Europe relates AFP The Slovenian Constitutional Court on Friday ruled to suspend the introduction of a new property tax, from which the government was planning to raise €400m this year as part of its effort to cut public deficit.

    Open Europe relates FT reports In April, Portugal will begin holding weekly lotteries in which luxury cars will be given away as prizes to citizens who ask retail businesses to provide them with a receipt with their personal tax number, as part of an effort fight tax evasion.

    In the paradigm and age of authoritarianism, diktat and the physical possession of gold bullion, are the two sole forms of sustained economic resource. Gold, $GOLD, has been in breakout since December 27, 2013, and an investment demand for gold commenced on January 24, 2013, when World Stocks, VT, traded lower.

    Feb 10 8:21 PM | Link | Comment!
  • In The New Normal The Sovereignty Of Regional Economic Fascism Provides The Seigniorage Of Diktat Money

    1) ... Reuters reports Wall Street drops on emerging market worry. Stocks gapped open lower on Friday January 31, 2014, making for their first monthly decline since August 2013, on ongoing concerns about emerging markets; this week Emerging Market Mining, EMMT, traded 2.7% lower, and Emerging Market Financials, EMFN, traded 2.0% lower.

    World Stocks, VT, traded 0.8% lower for the week, with the Sector Small Cap Pure Value, RZV, -1.9%, leading lower; while Electric Utilities, XLU, such as Next Era Energy, NEE, rose 3.0% this week to new rally highs, on a "reflation trade" on the Benchmark Rate, ^TNX, trading lower.

    Global Financials, IXG, traded 1.3% lower for the week with Regional Banks, KRE, -4.0%, such as GBCI, -8.4%, Life Insurance, PUK, -2.5%, Investment Bankers, KCE, -2.4% Emerging Market Financials, EMFN, -2.0%, and European Financials, EUFN, -1.8, leading lower.

    Yield Bearing Sectors trading lower included, Global Telecom, IST, -2.5%, Leveraged Buyouts, PSP, -2.2%, and Shipping, SEA, -2.1%, leading lower.

    Nation Investment, EFA, traded 1.9%, lower for the week, with the UK, EWU, -2.3%, Sweden, EWD, -2.2%, Nikkei, NKY, -2.1%, Eurozone, EZU, -1.7%, leading the developed nations lower.

    2) ... Doug Noland posts of Yen currency carry trade unwinding in the last two weeks of January 2014. Over two weeks versus the yen, the Argentine peso has declined 17.1%, the Russian ruble 6.6%, the Hungarian forint 6.1%, the Chilean peso 5.1%, the Brazilian real 5.0%, the Colombian peso 4.7%, the Polish zloty 4.6%, the South African rand 4.4%, the South Korean won 4.1% and the Indian rupee 3.9%,

    3) ... Risk On Investing, ONN, turned to Risk Off Investing, OFF, as investors derisked out debt trade investments in January 2014, with Leveraged Buyouts, PSP, falling 4.1%. And as investors deleveraged out of currency carry trade investments in the Emerging Markets, EEM, -8.6%, with Argentina, ARGT, -11, Russia, ERUS, -11, Chile, ECH, -14, Brazil, EWZS, -11, Columbia, GXG, -14, Poland, EPOL, -6, South Africa, EZA, -11, South Korea, EWY, -9, India, SMIN, -10%, Turkey, TUR, -13, Emerging Middle East and Africa, GAF, -11, as is seen in combined Yahoo Finance Chart.

    4) ... Aggregate Credit, AGG, rose 0.2% on the day, and 0.5% on the week, and 1.5% on the month, as the Benchmark Interest Rate, ^TNX, traded lower to 2.67%. Sarika Gangar of Bloomberg reports The rout in emerging markets is sending a chill over corporate bond sales worldwide as issuance slows and investors demand the highest extra yield to buy new debt in two months; the chart of Global Corporate Bonds, PICB, shows topped out, and trading 0.7% lower.

    Fiat money, defined as Aggregate Credit, AGG, and Major World Currencies, DBV, and Emerging Market Currencies, CEW, died on October 23, 2013, when the bond vigilantes began calling the Interest Rate on the US Ten Year Note, ^TNX, higher from 2.48%. And fiat wealth died on January 24, 2013, when Global Financials, IXG, led World Stocks, IXG, and Nation Investment, EFA, lower on investment fears that the world central banks monetary policies have crossed the rubicon of sound monetary policies and have made "money good" investments bad.

    Euthanasia of the investor, and all of liberalism's isms, that is forges of economic identity and experience, began with the bond vigilantes calling the Benchmark Interest Rate, ^TNX, that is the cost of money, higher on October 23, 2013, and completed on January 31, 2014, with the call higher of the Interest Rate on Emerging Currency Local Currency Bonds, EMLC. Higher Sovereign Interest Rates are the Means of Economic Destructionism.

    5) ... With the trade lower in the Emerging Markets, EEM, beginning with the rise of the Benchmark Interest Rate, ^TNX, on October 23, 2013, and their strong trade lower the week ending January 31, 2013, the world fully passed from the paradigm and age of liberalism, into that of authoritarianism.

    Confirmation of the death of fiat money, and the death of fiat wealth, as well as the failure of trust in ability of the debtor to repay the lender, comes from short term debt MINT, and FLOT, trading lower in value, as is seen in their combined ongoing Yahoo Finance chart.

    Mike Mish Shedlock posts What the crisis taught us: More bubbles! We need bigger bubbles to combat deflation! The Monetarists are out in full force warning about pending deflation. First it was Christine Lagarde with her message about the deflation ogre (see Christine Lagarde warns of Lord Voldemort, hopes to put deflation ogre in a bottle). Next on the list, deflation fighter extraordinaire, Telegraph writer Ambrose Evans-Pritchard, picked up on Lagarde's commentary and screamed at the top of his lungs "More Bubbles! We need bigger and bigger bubbles to combat the threat of deflation!" Of course Pritchard did not state it precisely that way, but it is indeed exactly what he called for, in equally loud, unmistakable tones.

    Tightening? What Tightening? Pritchard calls a decrease in asset purchases by the Fed from $85 billion a month to $65 billion a month "tightening". The claim is preposterous. It's very much like telling an obese child you can only have three pieces of cake after dinner, not four. Correctly viewed, tapering asset purchases is a reduction in stimulus, not tightening.

    I respond correctly viewed we see that greed has turned to fear, specifically fears that the US Fed's monetary policies of credit stimulus have crossed the rubicon of sound monetary policy and have made "money good" investments bad, that trust investments in China cannot be repaid, that Emerging Market Local Currency Bonds, EMLC, cannot be repaid, that Emerging Market Governments are untrustworthy, that the ECB will not back dollar denominated lending risks, that the European nations are insolvent sovereigns and their banks are insolvent financial institutions, and that global growth has slowed and that businesses worldwide will be to fail in increasingly large numbers.

    Doug Noland writes in Safehaven End Of An Era. We might have reached the initial phase of the visible failure of inflationism. When I began referring to the "global government finance Bubble" back in April 2009, I had reason to fear that the unfolding Bubble would indeed prove to be the "Granddaddy of all Bubbles." In particular, unprecedented amounts of "money" were poised to flood into China and the developing economies. The Bernanke doctrine specifically sought dollar devaluation along with the impetus to coerce savers from the safety of their savings out to the inflating global risk markets. And, importantly, policies had once again created a highly conducive backdrop for leveraged securities speculation.

    Scott Sumner writes Farewell to Ben Bernanke Bernanke had studied both the Great Depression and the Japanese "liquidity trap" and hence was better prepared than almost any other economist to deal with the crisis of 2008. From a market monetarist perspective he did poorly. But market monetarism is a tiny fringe group that's completely out of the mainstream. There was absolutely no way that Bernanke could have implemented the MM agenda even if he had wanted to. Judging the Fed chairman by this criterion would be like judging a President of the US on the assumption that he was a dictator freely able to enact the preferred agenda of a Bryan Caplan or Matt Yglesias. You judge people according to their marginal product. Bernanke did better than most would have done in his shoes. And for that he deserves thanks, and an enjoyable retirement.

    If the economics profession had been solidly market monetarist in 2008 then I'm confident that Ben Bernanke would have gladly implemented NGDPLT. We need 5% NGDPLT. The economics profession never gave him the support he needed to be more aggressive. The profession failed us, the Fed was just a symptom. OK, start hammering me in the comment section for being soft on Bernanke. I don't care.

    Liberalism was the paradigm and age of inflationism that in its terminal phase featured the US Dollar Hegemonic Empire. Fed Chariman Ben Bernanke was the father of the inflation trade, he led the greatest liberation movement of all time; he set the investor free to pursue investment choice. Under his leadership, the Great Investment Years, that is from 2008 through 2013, became the epoch of the riskless trade. Yet many chose not to invest, keeping their money in what has been safe assets, that is checking accounts and savings accounts, as is seen in the rise of M2 Money Supply, to 11,017, Billion.

    Liberalism's debt based money system was revitalized after the 2008 crash by Ben Bernanke who traded out "money good" US Treasuries for the most toxic of debt, such as that traded by Fidelity Mutual Fund, FAGIX, and then oversaw Global ZIRP, with the result that wily investors garnered tremendous gains in Small Cap Pure Value, RZV, Spin Offs, CSD, Pharmaceuticals, PJP, Nasdaq Internet, PNQI, Biotechnology, IBB, and Resorts and Casinos, BJK, as is seen in the ongoing chart of FAGIX, and these investments. Small Cap Pure Value, RZV, leaders, now trading lower, include Automobile Dealers, such as PAG, SAH, ABG, KAR, AN, KMX, and LAD.

    It was not US Government Bonds, GOVT, such as US Treasuries, TLT, or World Government Bonds, BWX, that underwrote liberalism's crack up boom. Rather, it was the most toxic, and highest yielding debt, such as Distressed Investments, FAGIX, Junk Bonds, JNK, Business Development Bonds, BDCS, Long Dated Corporate Bonds, VCLT, Eurozone Debt, EU, Emerging Market Bonds, EMB, Global Excluding US High Yielding Corporate Bonds, HYXU, and High Yield Municipal Bonds, HYMB, seen in combined ongoing Yahoo Finance chart of JNK, BDCS, VCLT, EU, EMB, HYXU, EMLC, HYMB, that underwrote ongoing investing, and generated liberalism's peak moral hazard wealth.

    Not only was it investors chasing yield, but it was also currency traders pursuing carry trades, such as the EUR/JPY and GBP/JPY, that drove investments from July 1, 2013, through January 24, 2014, continually higher, this especially seen in the rally of the Eurozone, EZU, and the UK, EWU, EWUS.

    Dispensation economics presents that regional sovereigns and seigniors constitute the new normal of regional economic governance. This contrasts with the concept of Ludwig von Mises who wrote "society lives and acts only in individuals; it is nothing more than a certain attitude on their part"; and with the concept that "all economic phenomena are the result of individual action."

    From the dispensation economics viewpoint, the two greatest economic geniuses of all time have been first, Milton Friedman, in developing the Free To Choose Floating Currency Regime and in suggesting to President Nixon that the US off the gold standard; and second, Ben Bernanke in maturing and perfecting the Creature From Jekyll Island as the platform for developing investors trust. It was under their guidance, that liberalism's democratic nation state's policies of investment choice, and banker regimes' policies of credit stimulus, created stupendous wealth for the wily investor.

    These two thought leaders have truly been economists extraordinaire, as they created liberalism's investor, and as they established liberalism's four dynamos of economic activity: creditism, corporatism, globalism, and clientelism.

    Nick Beams of WSWS details the zenith of the emerging markets debt trade. According to the Institute for International Finance, emerging markets have attracted about $7 trillion since 2005, which has been invested in a mixture of manufacturing and service enterprises, mergers and acquisitions, and stocks and bonds. JPMorgan Chase estimates that outstanding "emerging market" bonds are now $10 trillion, compared to just $422 billion in 1993.

    6) ... Bust always follows boom; in the new normal of authoritarianism, the sovereignty of regional economic fascism provides the seigniorage of diktat money. Now after five years of money market capitalism, with the Fed having lost control of the Benchmark Interest Rate, ^TNX, the tail risk of Global ZIRP, is economic deflation and economic recession; she is going to be a bad bitch.

    Regionalism is the singular dynamo of economic activity under authoritarianism, and is it attempts to deal with the derisking of liberalism's debt trades and deleveraging out of currency carry trades.

    John Redwood reports on the failure of UK sovereignty The death of Britain. Labour changed the UK and its constitution radically. We no longer have a constitution based on a powerful Parliament subject to the sovereignty of the people, expressed at election time in the ballot box and the rest of the time as public opinion. We are now a member state under European control in many fields.

    The UK was once the centerpiece of a global empire that spread across the globe. But its failure as a global hegemonic empire, is like that coming to the US Dollar hegemonic empire, as this one flows as well into the beast empire of iron diktat regional economic governance, and clay totalitarian collectivism of debt servitude. The Labour government was simply the nail in the coffin to decisively and thoroughly terminate the power of the once mighty British Empire.

    All empires have been based upon sovereignty and seigniorage; and most have been established on a debt based money system which established seigniorage wealth.

    Sovereignty is defined as the Sovereign's policies and schemes which establish economic life, and which define the nature of the person. Since 2008, liberalism's two persons, created by the democratic nation state banker regime, were the investor experiencing investment choice, and the client experience clientelism.

    Seigniorage is defined as the credit and flow of the Seignior, that is the top dog banker, who in coining money takes a cut, which defines the nature of economic life.

    Liberalism's peak economic experience came through the coordinated efforts of the world's central banks in establishing Global ZIRP, which created a crack up boom in risk assets, as the dynamos of economic action, these being creditism, corporatism, globalism, and clientelism, which facilitated inflationism, producing peak moral hazard based seigniorage wealth.

    Liberalism's sovereignty and seigniorage secured the Means of Economic Inflationism, where Milton Friedman and Ben Bernanke, using the Benchmark Interest Rate, ^TNX, under Global ZIRP, fathered and developed fiat wealth, defined as World Stocks, VT, Nation Investment EFA, Global Financials, IXG, and Dividends Excluding Financials, DTN, as well as the client receiving such things as SNAP Food Stamps, SSI Disability, DSHS Obamacare, and other transfer payments.

    Liberalism's economy died in January 2014 with the collapse of the Emerging Markets; this coming with the death of fiat money on October 23, 2013, and the death of fiat wealth on January 24, 2014.

    But twin extinction events, terminated liberalism, and as a result its creation, that being the investor and the client died, as greed turned to fear that the world central banks' monetary policies have crossed the rubicon of sound monetary policy and have made "money good" investments bad.

    The first extinction event was the bond vigilantes calling the Interest Rate on the US Ten Year Note, ^TNX, higher from 2.48%, on October 23, 2013, which terminated fiat money, defined as the combination of Aggregate Credit, AGG, and Major World Currencies, DBV, and Emerging Market Currencies, CEW.

    The second extinction event was the bond vigilantes calling interest rate on the Emerging Market Local Currency Bonds, EMLC, higher, and the currency traders calling the Japanese Yen, FXY, higher, and Emerging Market Currencies, CEW, lower, which forced the investor to derisk and delverage out of the Emerging Market, EEM.

    Thus in January 2014, Destiny passed The Bow of Economic Sovereignty from democratic nation states and the world central banks, to regional sovereigns and regional sovereign bodies; these are now growing in political capital, and its authority to establish regional economic fascism, replacing all isms, such as crony capitalism, European Socialism, Greek Socialism, and Communism. Regional economic fascism is fated to be the singular, all inclusive, economic experience, as the ships of state flounder, and sink in the tossing sea of debt deflation driven, competitive currency devaluation.

    Regionalism is establishing a new debt based money system, that being the diktat money system, where regional overlords, ruling in each one of the world's ten regions in mandates of regional economic governance, and in debt servitude schemes of totalitarian collectivism unifying all of mankind's seven institutions, establish regional security, stability and sustainability.

    News reports reflect that the beast empire is now rising out of waves Club Med sovereign, banking, and corporate insolvency. It has the feet of a bear in banking supervision in Frankfurt; mouth of a lion in Berlin, as DW reports German FM vows more aggressive foreign policy; and coat of a leopard in fiscal supervision in Brussels, where a One Euro Government, that is a Eurozone Superstate, featuring a banking union, military union, and fiscal-debt union will form as leaders meet in summits to renounce national sovereignty and announce regional pooled sovereignty as they set forth regional framework agreements, as these constitute the constitution of regional economic governance.

    If this were not enough, please consider that the beast regime will be accompanied by the Sovereign, Europe's New Charlemagne, as well as by the Seignior, that is the Top Dog Money Lord; and that they will forge, the new normal seigniorage wealth of diktat, and they will coin its peer, diktat money, out of their fiery words, will and way.

    Their sovereignty be Deutungshoheit in nature. There is only one sovereignty, and it provides only one life experience. Deutungshoheit is defined as interpretational sovereignty and connotes supremacy in all things, the result being German economic, banking, credit, and military supremacy, over all of the Eurozone. German linguist Thorsten Pattberg relates Deutungshoheit is a German word meaning "having the sovereignty over the definition of thought," sometimes also called "the prerogative of final explanation."

    Authority now longer resides in democracy; now Obrigkeit, as the Germans say, resides in beast regime's policies of diktat in regional governance in all of the world's ten regions, and has affect in schemes of debt servitude in totalitarian collectivism in each of the world's seven institutions.

    Duane and Shelly Muir ask Why are banking executives killing themselves? Ambrose Evans-Pritchard posts Italy is wasting away month by month. CNBC reports Italy's anti-establishment party bids to impeach president. Cliff Küle asks Is Europe heading for the largest debt default in history? Mike Mish Shedlock posts Barcelona to fine owners of empty homes 100,000 Euros.

    The Great Economic Transformation commenced with the failure of fiat wealth, that is World Stocks, VT, Nation Investment, EFA, and Global Financials, IXG, on the week ending January 24, 2014, and it pivoted economic experience from the paradigm and age of liberalism into that of authoritarianism,

    There be Austrian economists a plenty; their vision comes from the fiat of human philosophy. Arnold King write I believe that as government scales up, it gets worse. My recent essay offered international evidence for this. I discuss it in the widely-unread Unchecked and Unbalanced. Michael Lotus and James Bennett in America 3.0 also suggest that a country with more states, each less populous but with more governing autonomy, would be a desirable future. Almost ten years ago, I wrote We Need 250 States. Such be blinded visionaries, having no insight that one day soon, the North American Continent will become the North American Union, as Dana Gabriel writes in GlobalResearch Canada The integration of Canada into a US dominated North American Security Perimeter.

    Alejandro Chafuen, posts in Forbes, Top free market think tanks combat the hegemony of the bureaucrats. Austrian economists, such as Murray Rothbard, yearn for a free market economy, based upon a commodity based money system, that is one underwritten by hazelnuts or gold or some other physical asset, where there be liberty, and economic freedom, evidenced by such things as free prices. There are three chance of this coming about: none, never, and no way. Such thinking is a mirage on the authoritarian desert of the real, as well as a delusion of the sovereign individual mind.

    Greg using The Libertarian Bullhorn emphatically states There is no income inequality. Let us make one thing clear right now: there is no such thing as income "inequality". There are income differences, but no income "inequalities".

    The very term "inequality" has been constructed to imply a moral content in differences between people's incomes (or wealth). Every time we use the term we imply - deliberately or inadvertently - that income differences are problematic and need to go away. But if the premise of any discussion of income differences is that the differences are somehow immoral, then there really is not going to be a dispassionate conversation about those differences.

    There is a crucial distinction distinction between "income inequality" and "income difference". The former term, again with its moral content, implies that there is a role for economic policy - in other words government - to play in how people earn their money. This involvement, in turn, would come in the form of measures correcting differences between people's incomes.

    Beginning on October 23, 2013, as the bond vigilantes began calling the Benchmark Interest Rate, ^TNX, higher from 2.48%, on fears that that the world central banks monetary policies crossed the rubicon of sound monetary policy, and making money good investments in the Emerging Markets, EEM, and Real Estate, IYR, bad, there was a regime change.

    That being a regime change from liberalism's banker regime, with its rule of bankers and democratic nation states, where economic life centered, on the investor and investment choice, to the sovereignty of beast regime, with its rule of diktat of leaders, in regional economic governance and totalitarian collectivism, where economic life is centered around the debt serf and debt servitude, and which is characterized by ever decreasing income inequality, as all become more equally poor, as economic destructionism replaces economic inflationism.

    Under authoritarianism, seigniorage, that is moneyness comes from the word, will and way of regional seigniors, not bankers, and their appointed economic cardinals, who oversee and administer the factors of production, credit, trade, commerce, banking, and fiscal spending. Leaders such as Olli Rehn are authoritarianism's fathers, and thus the legislators of economic value, as well as the legislators that shape one's means and one's ends; these are increasingly enforcing austerity over debt serfs, to establish regional security, stability, and sustainability.

    While President Obama in his SOTU, communicated that it's time for income equality, and proclaimed a new war on poverty, Atlas has shrugged and having asked "What is economic justice", says "People will marvel and follow after the beast", saying its power is irresistible; yes, they all will be proclaiming, "who can make war against it."

    Under authoritarianism, there be the equity of debt servitude.

    The US Dollar, $USD, UUP, traded up to strong resistance at 81.37; it often trades inversely of gold.

    The future of seigniorage wealth is two fold: diktat and the physical possession of gold bullion. Jack Chan, in Safehven.com chart article, documented a breakout in Gold, GLD, in early January 2014; as he relates an investment demand for gold commenced on 12/27/2013. In the age of authoritarianism, the only two sustainable economic resources will be first, the diktat of leaders, and second, the physical possession of gold bullion; these are the only resource to assure that one not fall into poverty.

    Feb 03 2:45 PM | Link | Comment!
Full index of posts »
Latest Followers

StockTalks

More »
Posts by Themes
Instablogs are Seeking Alpha's free blogging platform customized for finance, with instant set up and exposure to millions of readers interested in the financial markets. Publish your own instablog in minutes.