Category Archives: Economy

How Much Longer Until The Engineered Financial Collapse Of The U.S. Hits?

(Brandon Smith) There are a multitude of false assumptions out there on what the collapse of a nation or “empire” looks like. Modern day Americans have never experienced this type of event, only peripheral crises and crashes. Thanks to Hollywood, many in the public are under the delusion that a collapse is an overnight affair. They think that such a thing is impossible in their lifetimes, and if it did happen, it would happen as it does in the movies – They would simply wake up one morning and find the world on fire. Historically speaking, this is not how it works. The collapse of an empire is a process, not an event.

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“Global Economic Decline Is Now Inevitable” – Dennis Meadows On ‘The Limits To Growth’

Fifty years ago, an international team of researchers was commissioned by the Club of Rome to build a computer simulation of exponential economic and population growth on a finite planet.

In 1971, its findings were first released in Moscow and Rio de Janeiro, and later published in 1972 under the title The Limits To Growth. The report concluded:

  1. Given business as usual, i.e., no changes to historical growth trends, the limits to growth on earth would become evident by 2072, leading to “sudden and uncontrollable decline in both population and industrial capacity”. This includes the following:
    • Global Industrial output per capita reaches a peak around 2008, followed by a rapid decline
    • Global Food per capita reaches a peak around 2020, followed by a rapid decline
    • Global Services per capita reaches a peak around 2020, followed by a rapid decline
    • Global population reaches a peak in 2030, followed by a rapid decline
  2. Growth trends existing in 1972 could be altered so that sustainable ecological and economic stability could be achieved.
  3. The sooner the world’s people start striving for the second outcome above, the better the chance of achieving it.

Few reports have generated as much debate, discussion and disagreement. Though it’s hard to argue that its forecasts made back in the early 1970s have proved eerily accurate over the ensuing decades.

But most of its warnings have been largely ignored by policymakers hoping (blindly?) for a rosier future.

One of the original seventeen researchers involved in The Limits To Growth study, Dennis Meadows, joins us for the podcast this week. Fifty years later, what does he foresee ahead?

Decline is now inevitable.

We’re without any question moving into the remainder of a century which is going to see, by the end of these decades, a much smaller population, much lower level of energy and material consumption and so forth.

Whether we retain equity among people and avoid the more violent forms of conflict remains to be seen. But sustainable development is no longer an option.

This is one of the most important discussions we’ve ever recorded among the hundreds produced over the past decade.

Click the play button below to listen to Chris’ interview with Dennis Meadows (55m:24s).

Authored by Adam Taggart via PeakProsperity.com,

Source: ZeroHedge

Canada Must Decide: More Trade With Communist China, Or Live Up To Our Values

Decoupling our economy from China before we become too dependent is the path our nation must take.

The increasingly brutal crackdown on Hong Kong protesters by Communist China, combined with China’s increasing aggression and provocation – not to mention their continued arbitrary detention of two Canadian Citizens – is raising difficult questions for Canada.

We now face a clear choice, and that choice is increasingly unavoidable:

Live up to our values, or increase our trade with Communist China.

Because, at this point, we can’t do both.

Even powerful American companies and brands (like the NBA) are discovering that the more you do business with China, the more you are forced to sacrifice your own values to the whims of the Communist Party.

The result is that China is exporting their authoritarian Communist system to the rest of the world, using trade as the cudgel to put other countries into a state of dependence.

And beyond that, we’ve already seen the hollowing out of Canada’s manufacturing sector, in large part because of China’s deceptive trade practices, currency devaluation, and dumping of product in markets across the globe.

Additionally, the majority of fentanyl coming into Canada and causing so much devastation arrives here from Communist China.

So, for all of these reasons, it is essential that we begin to decouple our economy from China.

Some will say that there is too much money to be made in China for us to decouple, and that trade is worth any cost to our values. But if that’s the direction Canada ends up taking, what is even the point of being a country?

If we have no values, no standards, and no willingness to defend what we claim to believe in as Canadians, then how can we hold our heads up high as a nation?

China doesn’t want trading partners, they want vassal states.

Now, some trade with China is certainly acceptable, in areas where China is desperate and thus can’t enforce demands in return. For food and natural resources which China can’t supply on it’s own, Canada loses nothing from trading with China, but when it comes to technology and manufacturing, trade with China puts our own economic and national security at risk.

And even in terms of food and natural resources, we must limit the expansion of trade with China, because relying too much on their market brings it’s own risk.

Thus, the solution is for Canada to impose large tariffs on imports from China in areas such as metals, military technology, and telecommunications (ban Huawei 5G), while putting limits on the exports of Canadian products to China. At the same time, producers should be compensated for losses from decoupling and we should seek out other markets (like India), where we can trade without throwing our values or national security in the trash.

We live in a dangerous world, and being dependent on trade with a nation like China represents far too big a risk to Canada. We must get rid of that risk before it’s too late, and that means we must begin the process of decoupling as soon as possible.

Source: Spencer Fernando

Negative Interest Rates Are The Price We Pay For De-Civilization

Do central bankers really think negative interest rates are rational? 

“Calculation Error,” which Bloomberg terminals sometimes display1, is an apt metaphor for the current state of central bank policy. Both Europe and Asia are now awash in $13 trillion worth of negative-yielding sovereign and corporate bonds, and Alan Greenspan suggests negative interest rates soon will arrive in the US. Despite claims by both Mr. Trump and Fed Chair Jerome Powell concerning the health of the American economy, the Fed’s Open Market Committee moved closer to negative territory today — with another quarter-point cut in the Fed Funds rate, below even a measly 2%. 

Negative interest rates are just the latest front in the post-2008 era of “extraordinary” monetary policy. They represent a Hail Mary pass from central bankers to stimulate more borrowing and more debt, though there is far more global debt today than in 2007. Stimulus is the assumed goal of all economic policy, both fiscal and monetary. Demand-side stimulus is the mania bequeathed to us by Keynes, or more accurately by his followers. It is the absurd idea, that an economy prospers by consuming and borrowing instead of producing and saving. Negative interest rates turn everything we know about economics upside down.

No society has ever survived consuming more than they can produce.

Under what scenario would anyone lend $1,000 to receive $900 in return at some point in the future? Only when the alternative is to receive $800 back instead, due to the predicted interventions of central banks and governments. Only then would locking in a set rate of capital loss make sense.

By “capital loss” I mean just that; when there is no positive interest paid, the principal itself must be consumed. There is no “market” for negative rates.

The future is uncertain, and there is always counter party risk. The borrower might abscond, or default, or declare bankruptcy. Market conditions might change during the course of the loan, driving interest rates higher to the lender’s detriment. Inflation could rise higher and faster than the agreed-upon nominal interest rate. The lender might even die prior to repayment.

Positive interest rates compensate lenders for all of this risk and uncertainty. Interest, like all economics, ultimately can be explained by human nature and human action. 

If in fact negative interest rates can occur naturally, without central bank or state interventions, then economics textbooks need to be revised on the quick. Every theory of interest contemplates positive interest paid on borrowed capital. Classical economists and their “Real” theory say interest represents a “return” on capital, not a penalty. Capital available for lending, like any other good, is subject to real forces of supply and demand. But nobody would “sell” their capital by giving the buyer interest payments as well, they would simply hold onto it and avoid the risk of lending.

Marxists think interest payments represent exploitation by capital owners lending to needful workers. The amount of interest paid in addition to the capital returned was stolen from the debtor, because the lender did not work for it (ignoring, of course, the capitalist lender’s risk). But how could a borrower be exploited by receiving interest payments for borrowing, i.e., repaying less than they borrowed? I suppose Marxists may in fact cheer the development of negative rates, and perversely see them as a transfer of wealth from lenders to borrowers (when, in fact, we know cheap money and credit overwhelmingly benefit wealthy elites, per the Cantillon Effect). So negative rates require Marxists to drastically rethink their theory of interest.

Austrians stress the time element of interest rates, comparing the lender’s willingness to forego present consumption against the borrower’s desire to pay a premium for present consumption. In Austrian theory interest rates represent the price at which the relative time preferences of lenders and borrowers meet. But once again, negative interest rates cannot explain how or why anyone would ever defer consumption without payment — or in fact pay to do so!  

It should be noted that rational purchasers of negative-yield bonds hope to sell them before maturity, i.e., they hope bond prices rise as interest rates drop even lower. They hope to sell their bonds to a greater fool and generate a capital gain. They are not “buying” the obligation to pay interest, but the chance of reselling for a profit. So purchasing a negative-yield bond might make sense as an investment (vs.institutional and central bank bond buyers, which frequently hold bonds to maturity and thereby literally pay to lend money). But if and when interest rates rise, the losses to those left holding those $13 trillion of bonds could be staggering.

In the meantime, a huge artificial market for at least nominally positive US Treasury debt grows, strengthening the dollar and suppressing interest rates here at home. Once again, the dollar represents the least dirty shirt in the laundry. Congress loves this, of course, because even 5% rates would blow the federal budget to smithereens. Rising rates would cause debt service to be the largest annual line item in that budget, ahead of Social Security, Medicare, and defense. So we might say Congress and the Fed are in a symbiotic relationship at this point. The rest of the world might call it America’s “exorbitant privilege.”

Negative interest rates are the price we pay for central banks. The destruction of capital, economic and otherwise, is contrary to every human impulse. Civilization requires accumulation and production; de-civilization happens when too many people in a society borrow, spend, and consume more than they produce. No society in human history previously entertained the idea of negative interest rates, so like central bankers we are all in uncharted territory now. 

Our job, among many, is to bring the insights of Austrian economics on money and banking to widespread attention before something truly calamitous happens.

Source: by Jeff Deist | Mises Wire

Whole Foods To Cut Part Time Employee Health-Care Benefits

Amazon-owned Whole Foods will be withdrawing medical benefits for hundreds of its part-time workers starting Jan. 1, 2020, the company said Thursday.

In the past, employees needed to work at least 20 hours a week to buy into the health-care plan. Now they will need to work at least 30 hours. Less than 2% of its workforce, or 1,900 employees, will no longer be eligible for medical coverage, under the new policy, the company said.

The news was first reported by Business Insider.

“In order to better meet the needs of our business and create a more equitable and efficient scheduling model, we are moving to a single-tier part-time structure,” a company spokesperson said in an email. “We are providing Team Members with resources to find alternative healthcare coverage options, or to explore full-time, healthcare-eligible positions starting at 30 hours per week. All Whole Foods Market Team Members continue to receive employment benefits including a 20% in-store discount.”

In 2018, Amazon raised its minimum wage to $15 for all employees, including those at Whole Foods. Amazon also announced last week that it was planning on adding more than 30,000 permanent jobs in its tech, corporate and fulfillment departments.

Source: by Jasmine Wu | CNBC

New World Order In Meltdown

Last week was full of portentous events. Only somebody who has not been awake for the last few years will fail to realize how these at first sight unconnected events are part of the same matrix. There was the ever louder talk in mainstream media about an approaching global recession, inverted yield curves and the negative yields, which tell us that the Western financial system is basically in coma and kept alive only by generous IV injections of central bank liquidity. By now it has dawned on people that the central bankers acting as central planners in a command economy and printing money (aka quantitative easing) to fuel asset bubbles are about to wipe off the last vestiges of what used to be a market economy.

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Trump’s Farm Bailout Flows To “City Slickers,” a D.C. Lobbyist and ‘Farms’ on Golf Courses

About 9,000 “city slickers” living in luxurious neighborhoods of the nation’s largest cities received a farm bailout from the Trump administration to minimize the impact of the trade war with China, an updated Environmental Working Group (EWG) analysis of Department of Agriculture data shows.

The EWG analysis of USDA data revealed that “many recipients live not in farm country but in the nation’s 50 largest cities or in other decidedly non-rural locations.”

Urban recipients of the bailout include members of farm families, landowners, and investors. These people provide land, capital, or equipment for farms and make high-level decisions for operations.

EWG said bailout recipients include 70 people in San Francisco, 65 residents in New York City, 63 residents in Los Angeles, 61 residents in Washington, D.C., and 19 Miami.