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The NEW U.S. Economic Mythology

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The Corporate media lies to us, all of the time. This is not an assertion, merely an elementary observation. With a real “free press”, we see occasional moments where different media outlets may agree on the interpretation of particular events and/or the relative importance of events. All other times, we see a divergence of opinion between media outlets.

This is what we would expect to see. Homo sapiens are a contrarian species. We all have our own ideas – or at least we used to.

What do we see with the Corporate media today? We see a small collection of gigantic corporations which control everything we see and hear. That’s called an oligopoly. It is not even legal. And with rare exceptions, we see these gigantic corporations saying the same thing, all the time.

That’s not a free press. That’s a propaganda machine. And when a propaganda machine repeats the same message over and over, we have a name for that too. We call it brainwashing.

For example; for many, many decades, marijuana was supposedly one of the Demon Drugs. Not only did it pose several grave perils to our health, but it was a “gateway drug”. Let little Johnny or Janey get their hands on a joint, and next thing you know they would be shooting heroin.

Was any of that true? Of course not. It was all propaganda.

Today, we know that marijuana’s active ingredients have many benign and even therapeutic applications. As jurisdictions across North America now begin legalizing the recreational use of marijuana, the only difference being noticed by the governments of those jurisdictions is more tax dollars in their coffers – and less-crowded jails.

We’re not only fed legal propaganda and brainwashing, we’re also subjected to economic brainwashing. And nowhere do we see more intense brainwashing than with respect to the Mighty U.S. Economy.

For many, many years, when the U.S. economy was genuinely prosperous, successive U.S. governments had an overt and explicit “strong dollar policy”. A strong currency was good. Having each dollar in a consumer’s wallet stretch farther was good, because that consumer could buy more goods.

However, when the evil Alan Greenspan and his successor B.S. Bernanke were ordered by their oligarch Masters to begin to rapidly dilute and debase the U.S. dollar, the elementary logic of a strong-dollar policy became inconvenient for the oligarchs. New propaganda had to be invented.

Suddenly, a strong currency was bad. “Competitive devaluation” became the new mantra of the U.S. government and the subordinate puppets across the Western world. It was good to have a weak currency. It was good for each dollar in a consumer’s wallet to be devoured by inflation. It was good for consumers to buy less and less goods because their dollar was shrinking – not stretching.

It never made any sense. But the brainwashing has been repeated to us over and over, year after year, and so we (most of us) believe it.

Then these same oligarchs decided to manipulate the U.S. dollar upward , pushing it to absurd heights versus almost every currency on the planet. Has the (new) “strong dollar” hurt the U.S. economy? Apparently not, because what we hear every minute of every day is that the Federal Reserve is on the verge of pulling the trigger on higher interest rates because the U.S. economy is so damn strong.

Then we have oil.

For many, many years; we have been told that high oil prices are bad. Why? Because we use oil (directly or indirectly) in almost all human economic activity. Dramatically pushing up the price of a primary economic input is like a tax on the economy. Indeed, the mainstream media has often uttered precisely that phrase: “higher oil prices are a tax on the economy.”

Just as it is elementary logic that a strong currency is good, it is also elementary logic that high oil prices are bad – bad for everyone except oil producers. But this logic is suddenly no longer convenient for the oligarchs, so once again they have ordered their media foot soldiers to invent new propaganda. Note the speed with which this new propaganda message has been injected into the Corporate media megaphone.

The crazy idea that higher oil prices might be good for the economy right now

That propaganda headline was rolled out less than a year ago at the Washington Post. See how audacious this propaganda machine has become. It acknowledges that the mere suggestion that high oil prices might be good is crazy. Then the propaganda mouthpiece who wrote this propaganda goes on to “explain” to the insipid sheep reading the article why high oil prices are actually a good thing.

Scarcely more than six months later; we see this propaganda headline from the hardcore brainwashing machine known as Bloomberg News.

What Will Lift World Economy? Goldman Says Higher Oil Prices

Suddenly, the “crazy” idea that higher oil prices are a good thing is no longer being introduced in a sheepish, almost apologetic manner. Now it is being presented to us as the new wisdom, uttered by none other than the economic sages (i.e. compulsive liars) of Goldman Sachs.

We’re brainwashed with various forms of ludicrous mythology on a regular basis. The point of this article is not to merely point out that the Corporate media has once again been caught passing off ridiculous lies. That’s nothing more than another “dog bites man” story.

The real importance of pointing out the New U.S. Economic Mythology comes in looking past the mere propaganda itself. There could be no possible reality where imposing a “tax on the economy” could be good for the economy. It might be good for the government collecting the tax, but it’s certainly never good for the economy itself.

How has the propaganda machine endeavoured to pass off this ridiculous lie? Why has the propaganda machine been told to pass off this ridiculous lie?

First the “how”. Why are high oil prices now supposedly “good for the economy”, when this could never possibly be true? It’s because – get ready for this – there is “not enough inflation”. There’s nothing at all new about that lie. The prostitutes of the Federal Reserve have been peddling this nonsense for years. From 2013, and once again from Bloomberg :

Why the Fed Worries Inflation Is too Low

Regular readers already know that this is a heinous lie. Inflation is economic cancer . Inflation is exactly like “a tax on the economy” because as with a tax, it claws away our purchasing power. It is impossible for a human being to have “not enough cancer”. It is impossible for an economy to have “not enough inflation”.

Making this lie especially heinous is that we have much too much inflation. Food prices are soaring at a double-digit rate, with only brief lulls between the next explosion in prices. Housing prices are soaring higher at a rate never before seen in our lifetime. We have far too much inflation, yet the liars of the Corporate media and the liars of the Federal Reserve and the liars of our puppet governments tell us there is “not enough inflation”.

So why bring oil into this? Why try to pass off two utterly absurd lies together, simultaneously? We need higher oil prices because there is not enough inflation.

To understand the necessity for the Corporate media to attempt to pass off two ridiculous lies simultaneously requires turning back the clock a few years, back to when the U.S. government chose to manipulate the price of oil to a rock-bottom level. That’s what we were told.

Barack Obama publicly boasted that lower oil prices were “part of the U.S. strategy” to punish Russia. Of course in reality the actual manipulation of oil markets was carried out by the banking crime syndicate, known to regular readers as the One Bank . But the bankers kept oil prices too low for too long.

Russia is still standing. However, a few more months of $30/barrel would have completed the vaporization of the much-hyped U.S. shale oil sector. That would have been embarrassing for the oligarchs. Shale oil had to be saved. Oil prices had to rise. But now another problem.

How does the Corporate media continue to pretend there is a “U.S. economic recovery” as oil prices rise significantly? How can the Federal Reserve continue to pretend that it’s “about to raise interest rates” with oil prices rising? More potential embarrassment for the oligarchs and their lackeys.

New mythology was necessary. Higher oil prices are good (a lie) because there is not enough inflation (a lie). And those lies are now necessary because the Corporate media has been ordered to continue to pretend there is a U.S. recovery (a lie) and pretend that the Federal Reserve is “about to raise interest rates” (a lie).

Oh what a tangled web we weave when first we practice to deceive.

One caveat on the last of the Big Lies currently being passed off about the U.S. economy. It is possible that the Federal Reserve may suddenly begin to normalize interest rates – once their oligarch Masters give them the word that it’s time to torpedo the U.S. stock market bubble.

Warren Buffett is 86 years old, and currently sitting on a cash hoard of $85 billion vampire-dollars. Those two numbers both tell us that the Next Crash is coming sooner, not later.

Jeff Nielson is co-founder and managing partner of Bullion Bulls Canada; a website which provides precious metals commentary, economic analysis, and mining information to readers and investors. Jeff originally came to the precious metals sector as an investor around the middle of last decade, but with a background in economics and law, he soon decided this was where he wanted to make the focus of his career. His website is www.bullionbullscanada.com.
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‘Everything Will Grind To A Halt’ After March 15th

J.C. Penney and Family Christian Stores are the latest retail giants to announce widespread store closings. As you will see below, J.C. Penney plans to close between 130 and 140 stores, and Family Christian is closing all of their 240 stores. In recent months the stock market has been absolutely soaring, and so most people have simply assumed that the “real economy” must be doing well. But that is not the case at all. In fact, the retail apocalypse that I have been documenting for quite some time appears to be gaining momentum.

J.C. Penney is not in as rough shape as Sears is just yet, but it is definitely on a similar trajectory. In the end, they are both headed for bankruptcy. That is why it wasn’t too much of a surprise when J.C. Penney announced that they are getting rid of about 6,000 workers and closing at least 130 stores

J.C. Penney (JCP) plans to close 130 to 140 stores and offer buyouts to 6,000 workers as the department-store industry sags in competition with online sellers and nimble niche retailers.

The company said Friday that it would shutter 13% to 14% of its locations and introduce new goods and services aimed at the shifting preferences of its customer base.

Meanwhile, many observers were quite surprised when Family Christian Stores decided to fold up shop for good. They were known as the largest Christian retailer on the entire planet, but now after 85 years they are going out of business forever

Family Christian, which bills itself as the “world’s largest retailer of Christian-themed merchandise,” announced Thursday it is closing after 85 years.

The non-profit company, employing more than 3,000 people in 240 stores in 36 states, said in a brief statement that the retailer had been facing declining sales since filing for bankruptcy protection in 2015 and had no choice but to shut down.

These two announcements are part of larger trend that we have been witnessing all over the country. As I have documented previously, Macy’s announced that it would be closing 100 stores earlier this year, and about the same time Sears said that it would be closing another 150 stores.

Back in 2010, Sears had a staggering 3,555 stores.

Before their recent announcement, Sears was down to 1,503 stores, and now this latest round of cuts will leave them with somewhere around 1,350.

Of course it won’t be too long before Sears has zero stores, and my regular readers know that I have been talking about the demise of Sears for a very long time.

The cold, hard truth of the matter is that the “real economy” is a total mess, and that is one of the primary reasons why these ridiculous stock market valuations that we are seeing right now are not sustainable.

One expert that agrees with my assessment is former Reagan Administration White House Budget Director David Stockman. In a recent interview, he explained why he believes that “everything will grind to a halt” after March 15th…

Stockman, who wrote a book titled “Trumped” predicting a Trump victory in 2016, says, “I don’t think there is a snowball’s chance in the hot place that’s going to happen. This is delusional. This is the greatest suckers’ rally of all time. It is based on pure hopium and not any analysis at all as what it will take to push through a big tax cut. Donald Trump is in a trap. Today the debt is $20 trillion. It’s 106% of GDP. . . .Trump is inheriting a built-in deficit of $10 trillion over the next decade under current policies that are built in. Yet, he wants more defense spending, not less. He wants drastic sweeping tax cuts for corporations and individuals. He wants to spend more money on border security and law enforcement. He’s going to do more for the veterans. He wants this big trillion dollar infrastructure program. You put all that together and it’s madness. It doesn’t even begin to add up, and it won’t happen when you are struggling with the $10 trillion of debt that’s coming down the pike and the $20 trillion that’s already on the books.”

Then, Stockman drops this bomb and says:

“I think what people are missing is this date, March 15th2017. That’s the day that this debt ceiling holiday that Obama and Boehner put together right before the last election in October of 2015. That holiday expires. The debt ceiling will freeze in at $20 trillion. It will then be law. It will be a hard stop. The Treasury will have roughly $200 billion in cash. We are burning cash at a $75 billion a month rate. By summer, they will be out of cash. Then we will be in the mother of all debt ceiling crises. Everything will grind to a halt. I think we will have a government shutdown. There will not be Obama Care repeal and replace. There will be no tax cut. There will be no infrastructure stimulus. There will be just one giant fiscal bloodbath over a debt ceiling that has to be increased and no one wants to vote for.”

In that same interview, Stockman also predicted that “markets will easily correct by 20% and probably a lot more“, and he noted the glaring disconnect between current stock prices and how the U.S. economy is actually performing

“The S&P 500 has been trading at 26 times earnings while earnings have been dropping for the past six or seven quarters. There is no booming recovery coming. There is going to be a recession and there will be no stimulus baton to bail it out. That is the new fact that neither Trump nor the Wall Street gamblers remotely understand.”

It is very difficult to argue with Stockman on this.

There are some people out there that seem to think that Donald Trump can miraculously turn the U.S. economy around just because he is Donald Trump.

It doesn’t work that way.

We are 20 trillion dollars in debt, and we are currently adding about a trillion dollars a year to that total. There is no possible way that Trump can cut taxes, increase military spending, build a border wall, spend much more on veterans and spend an extra trillion dollars on rebuilding our crumbling infrastructure.

We are flat broke as a nation and there simply is not money available to do everything that Donald Trump wants to do.

So we shall see what happens after March 15th.  Unfortunately, I happen to agree with Stockman that economic reality is about to come knocking and Trump and his supporters are about to get a very rude wake up call.

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Looks like Ron Paul was right about the gold standard

In the aftermath of the dot com crisis Greenspan cut interest rates to near-zero in the early 2000s, igniting the housing bubble, which neither he nor anyone else at the Fed was able to detect along the way. He even made it into the dictionary, as the “Greenspan put” became the term for government bailing out its Wall Street benefactors. From this the leveraged speculating community learned that no risk was too egregious and no profit too large, because government – that is, the Fed – had eliminated all the worst-case scenarios. Put another way, under Greenspan profit was privatized but loss was socialized.

Then, another metamorphosis took place: after Greenspan retired from the Fed in 2006 he began morphing back into his old libertarian self. A cynic might detect a desire to avoid the consequences of his past actions, while a neurologist might suspect senility. But either way the transformation has been breathtaking.

Consider Greenspan’s latest public address. In an extended interview published in the World Gold Council’s Gold Investor February issue, Greenspan repeated his now standard warning about the risk of coming stagflation, which would send the price of gold higher: “The risk of inflation is beginning to rise… Significant increases in inflation will ultimately increase the price of gold.” As such, “investment in gold now is insurance. It’s not for short-term gain, but for long-term protection.”

Going back to his libertarian roots, it was the idea of returning to a gold standard that Greenspan focused on: a gold standard that he said would help mitigate risks of an “unstable fiscal system” like the one we have today.

“Today, going back on to the gold standard would be perceived as an act of desperation. But if the gold standard were in place today, we would not have reached the situation in which we now find ourselves,” he said.”[T]here is a widespread view that the 19th Century gold standard didn’t work. I think that’s like wearing the wrong size shoes and saying the shoes are uncomfortable! It wasn’t the gold standard that failed; it was politics.

And the punchline: “We would never have reached this position of extreme indebtedness were we on the gold standard, because the gold standard is a way of ensuring that fiscal policy never gets out of line.”

To be sure, this is something we discussed exactly two years ago, when we showed a chart showing the sudden end of prosperity for the “bottom 90%” of US earners at the time Nixon ended the US Gold Standard in August 1971, unleashing what ultimately would be the “Great Moderation”, an unprecedented increase in US debt, and the stagnation of real incomes and net worth for all but the “top 1% of earners.”


As we said then, in retrospect it is no wonder “why the 1% hates the gold standard” and added that the chart above, “should also clarify just why to the “1%”, including their protectors in the “developed market” central banking system, their tenured economist lackeys, their purchased politicians and their captured media outlets, the topic of a return to a gold standard is the biggest threat conceivable.

As for Greenspan’s repeated attempts to undo the past by admitting his mistakes, the jury is out. As Rubino concludes, “one of the nice things about the information age is that public figures leave long paper trails and can’t therefore easily escape their pasts. Greenspan’s past, being perhaps the best documented of any central banker in history, will haunt him forever.”

That said, at least Greenspan is going out a gold bug.

* * *

Below are the key excerpts from his Gold Investor interview:

Q. As inflation pressures grow, do you anticipate a renewed interest in gold?

Significant increases in inflation will ultimately increase the price of gold. Investment in gold now is insurance. It’s not for short-term gain, but for long-term protection.

I view gold as the primary global currency. It is the only currency, along with silver, that does not require a counterparty signature. Gold, however, has always been far more valuable per ounce than silver. No one refuses gold as payment to discharge an obligation. Credit instruments and fiat currency depend on the credit worthiness of a counterparty. Gold, along with silver, is one of the only currencies that has an intrinsic value. It has always been that way. No one questions its value, and it has always been a valuable commodity, first coined in Asia Minor in 600 BC.

* * *

Q. Although gold is not an official currency, it plays an important role in the monetary system. What role do you think gold should play in the new geopolitical environment?

The gold standard was operating at its peak in the late 19th and early 20th centuries, a period of extraordinary global prosperity, characterised by firming productivity growth and very little inflation.

But today, there is a widespread view that the 19th century gold standard didn’t work. I think that’s like wearing the wrong size shoes and saying the shoes are uncomfortable! It wasn’t the gold standard that failed; it was politics. World War I disabled the fixed exchange rate parities and no country wanted to be exposed to the humiliation of having a lesser exchange rate against the US dollar than it enjoyed in 1913.

Britain, for example, chose to return to the gold standard in 1925 at the same exchange rate it had in 1913 relative to the US dollar (US$4.86 per pound sterling). That was a monumental error by Winston Churchill, then Chancellor of the Exchequer. It induced a severe deflation for Britain in the late 1920s, and the Bank of England had to default in 1931. It wasn’t the gold standard that wasn’t functioning; it was these pre-war parities that didn’t work. All wanted to return to pre-war exchange rate parities, which, given the different degree of war and economic destruction from country to country, rendered this desire, in general, wholly unrealistic.

Today, going back on to the gold standard would be perceived as an act of desperation. But if the gold standard were in place today we would not have reached the situation in which we now find ourselves. We cannot afford to spend on infrastructure in the way that we should. The US sorely needs it, and it would pay for itself eventually in the form of a better economic environment (infrastructure). But few of such benefits would be reflected in private cash flow to repay debt. Much such infrastructure would have to be funded with government debt. We are already in danger of seeing the ratio of federal debt to GDP edging toward triple digits. We would never have reached this position of extreme indebtedness were we on the gold standard, because the gold standard is a way of ensuring that fiscal policy never gets out of line.

* * *

Finally, buried at the very end of the interview was perhaps the most interesting statement by Greenspan: the former Fed Chair’s implicit admission that Ron Paul was right all along:

Q. Against a background of ultra-low and negative interest rates, many reserve managers have been large buyers of gold. In your view, what role does gold play as a reserve asset?

When I was Chair of the Federal Reserve I used to testify before US Congressman Ron Paul, who was a very strong advocate of gold. We had some interesting discussions. I told him that US monetary policy tried to follow signals that a gold standard would have created. That is sound monetary policy even with a fiat currency. In that regard, I told him that even if we had gone back to the gold standard, policy would not have changed all that much.

You can read the full story at ZeroHedge right here…

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Is Your Sears Or KMart Store About To Close?

One day after Macy’s announced it would fire more thousands of workers after another holiday spending debacle, and will shut down dozens of stores as the overhyped consumer recovery fails to materialize for the 7th consecutive year, today struggling Sears Holdings, owner of K-Mart announced that the near-insolvent, anachronistic retail chain has obtained some more last-second liquidity after selling its Craftsman brand to Stanley Black and Decker for $900 million. That was not enough however, as Sears needed another billion dollar which it got courtesy of its controlling shareholder Eddie Lampert who gave the company a $1 billion loan.

The company, which has been near death for years and years, issued the latest dire warning about its holiday business on Thursday, when it announced same-store sales fell as much as 13% in November and December, compared with a 2.1% drop at Macy’s Inc.

As a result, “vendors had gotten really spooked,” said Gary Herwitz, a managing director of CoMetrics Partners, which advises companies that supply goods to Sears. “But now it seems that Sears bought themselves another year.”

Meanwhile, it now appears that instead of a long-overdue “big bang” bankruptcy, Sears will continue instead melting away with periodic closures of its thousands of badly run, inefficient stores. And indeed, this morning Sears said it would continue to shrink by closing 108 Kmart and 42 Sears stores, including the original Kmart location that opened in Garden City, Mich., in 1962. Over the past decade, the company has closed or sold more than 2,000 stores, or two thirds of its locations.

So is your neighborhood Sears or KMart store one of the 150 that are about to shut down as the heat around the melting Sears ice cobe is raised by one more degree? Find out on the chart below.