Paul Craig Roberts-US Government Most Corrupt on Earth

http://usawatchdog.com/is-ruble-collapse-act-of-war-paul-craig-roberts/

By Greg Hunter’s USAWatchdog.com

Former Assistant Treasury Secretary Dr. Paul Craig Roberts thinks the only thing that explains the plunge in the Russian ruble is that it is being attacked by America.  Roberts contends, “It is not a currency crash in the sense there are no economic reasons for the ruble’s fall.  Unlike the United States, which has a massive trade deficit, and if the currency markets were not rigged, the dollar would be collapsing, the Russian economy has a trade surplus.  Therefore, there is no pressure on its currency for economic conditions.”  Dr. Roberts goes on to say, “This is not some independent action of market forces. So, it’s either hedge funds, currency speculators like Soros, or it’s an Act of War on behalf of the United States government by the Federal Reserve or the Exchange Stabilization Fund. . . or possibly both hedge funds working with the federal government.”

Manipulating the markets, any market, is supposed to be illegal, but don’t count on the bankers going to jail.  Dr. Roberts, who has a PhD in economics, thinks, “The big banks, the big Wall Street money, are essentially agents of the government.  This is why they don’t get prosecuted.  This is why they can break all kinds of laws, commit felonies and settle with a fine.  This is what we’ve been watching in the financial arena.  When these financial gangsters are caught, instead of being indicted and put on trial, they pay money.”

How could the Russians retaliate?  Dr. Roberts says, “If the Russians wanted to do payback, it’s very easy for them.  The next time all of these contracts, paper gold contracts, are dumped on the futures market, the Russians need to go and buy them all up, then demand delivery because there is no gold to deliver.  The whole system would collapse.  So, the Russians could cause a gold squeeze here anytime they want. . . . They would blow the system wide open because they can’t make delivery.”

On war, Dr. Roberts says recent resolutions passed in Congress certainly point to it.  Dr. Roberts explains, “These resolutions demonize Russia and define it as a great threat.  They call on Obama to arm the Ukrainians so we can use the Ukrainians to fight Russia.  In other words, we are going to fight Russia down to the last Ukrainian.  Of course, the Ukraine can’t fight Russia.   The whole purpose of this is to have the Russians slap them down, then we can go to the Europeans and say see, see the Russians invaded and look how dangerous they are.  You’re next.  They will be in Berlin tomorrow.  They’ll be in London by the end of the week.  Paris will fall, and Rome will burn. We can’t wait to tell the Europeans this because the whole purpose of this is to completely break every kind of relationship, economic, political and cultural, between Russia and Europe.  That’s what Washington’s goal is.  That’s what it’s all about.  This includes attacks on the ruble and sanctions.  They are setting up a war that nobody can win, for what reason?  For American superiority?  You don’t have superiority if the world is awash in radioactive waste and there is nuclear winter.  The climate has collapsed.  The whole thing is an absurdity.”

On the teetering economy and possible economic collapse, Dr. Roberts says, “We know something serious is wrong.  The only provision of Dodd-Frank that has any teeth is the provision that says if the big banks are going to be casinos and gamble on derivatives, they cannot do that in the depository institution where depositors have their accounts.  They have to farm it out into subsidiaries.  So, if the subsidiaries get into trouble, the subsidiaries have no access to depositors’ money.  This is the only real reform part of Dodd-Frank.  Citigroup got put into the recent spending bill, the repeal of this, so they can gamble on derivatives, and taxpayers and depositors are on the hook for the losses.  Why would you do that unless you had a lot of derivatives trouble.  It could easily be the oil derivatives. . . .  The banks can gamble all they want and they are covered by the FDIC, which has no money. . . . This gives the banks access to depositors’ money. . . . This is sick, and it shows the United States government is the most corrupt government on earth, far more corrupt than Russia or China.”

Join Greg Hunter as he goes One-on-One with economist Dr. Paul Craig Roberts.

(There is much more in the video interview with Dr. Roberts.)

After the Interview:

Dr. Roberts produces articles every week for the public to read free of charge on his website,PaulCraigRoberts.org.  Roberts sells no products and has no advertising.  If you would like to contribute to offset the expenses of keeping the site on the internet, please click here.

Some Early Morning headlines from Zerohedge

Putin Defiant, Lashes Out At West, Tells Russians Economy May Stay Weak For Two Years

Having started at noon Moscow time (4am Eastern), Putin’s annual Q&A run for a massive three and a half hours, during which the Russian leader took numerous questions from the public and as expected, reiterated the key “rally around the flag” talking points that have permeated Russian rhetoric over the past few weeks as the economic situation in Russia deteriorated. As Bloomberg notes, the conference was attended by hundreds of reporters and carried live on television around the world, the event took on heightened importance this year as the president sought to reassure a Russian public unnerved by the ruble’s plummet.  While he did acknowledge the difficult economic reality, Putin sought to reassure his countrymen that the current weakness “would last no longer than two years.” Putin promptly pivoted against the west and accused the U.S. and European Union of trying to undermine his country and blaming external factors for the sharp plunge in the ruble, notably the drop in oil saying that “the economy will naturally adapt to the new conditions of low oil prices.”

Swiss Central Bank Plunges Into NIRP, Sends Deposit Rates Negative, Scrambles Against Safe-Haven Capital Flight

Everyone thought that any major monetary policy surprises and/or capital controls today would come from Putin during his annual press conference. Boy were they wrong: just after 2 am Eastern, none other than the Swiss National Bank joined the ranks of the ECB in scrambling to stem the wave of capital flight, not to mention the cost of money, when it announced it too would start charging customers for the privilege of holding cash in its banks, when it revealed a negative, -0.25% interest rate on sight deposits: a step which according to the SNB was critical in maintaining the 1.20 EURCHF floor.

Crude Prices Pump-And-Dump After Saudi “Temporary Problem” Comments

Crude prices surged from $56.50 to $59 after Saudi Oil Minister al-Naimi comments that, as Bloomberg reports, the global oil markets are experiencing “temporary” instability caused mainly by a slowdown in the world economy, sabre-rattling that increased supply from regions outside OPEC (cough US cough), where oil-production costs are higher, is affecting the market. However, between his comments on no production cuts (and rising exports) and the UAE Oil Minister then confirming OPEC will not change output levels and has no intention of holding an emergency OPEC meeting, crude prices have plunged back down below $57. Energy stocks don’t care though…

This Is What Gold Does In a Currency Crisis

To say that gold is in a bear market is to misunderstand both gold and markets. Gold isn’t an investment that goes up and down. It is money in the most basic store-of-value sense. Most of the time it just sits there, and when its price changes in local currency terms that says more about the local currency than about gold. But when currencies collapse, gold shines.

From Sydney to Rome, until Islam rules the world

http://www.ynetnews.com/articles/0,7340,L-4604079,00.html

As the Israeli-Arab conflict becomes more religious, solidarity with the Israeli side grows; because now the war is not against Israel – it’s against the entire Western world.

“One Ummah without the West; until Islam rules there will be no rest.”

These words, said by children aged six to 13, were broadcast during a solidarity ceremony with the Islamic State, in which participants also waved the organization’s flags.

It didn’t happen in Mosul. The ceremony took place recently in one of the suburbs of Sydney. The shocking event wasdocumented by the Australian 7News television news service. The irony of date is that the Sydney café where the hostage siege took place Monday is located beside to the network’s offices.

The children participating in the ceremony are wearing Muslim clothes, speaking English. They are guided by adult jihadists. The education they receive is similar to the education in Gaza. It’s happening on the other side of the world. The goal is not to free al-Aqsa. The goal is to free Sydney from the chains of democracy.

It turns out that there is no need for the Palestinian-Israeli conflict, or for the occupation, to nurture hatred towards democracy and the West. The jihadists in Sydney are also calling for the death of US President Barack Obama and Syrian President Bashar Assad.

“It’s sickening,” Australian Immigration Minister Scott Morrison said in response to the video. The Australians are also trying to do something. The immigration policy is changing. The Israeli infiltration prevention bill is an embodiment of humanity compared to what is going on there.

By the way, one of the first terrorist attacks in the Islamic context was carried out on Australian soil. In as early as 1915, two Muslims murdered four train passengers. The assailants were killed. In a letter one of them left behind, he said he was defending the Ottoman caliphate and that “I must kill you and give my life for my faith, Allāhu Akbar.”

What has Australia done to them? Why prepare a cadre of children, starting from the age of six, educate them to jihad and raise them as potential shahidim (martyrs)?

Abu Bakr al-Baghdadi: Islamic Caliphate the world over
Abu Bakr al-Baghdadi: Islamic Caliphate the world over

Australia hasn’t done anything to them. They don’t need someone to do something to them. That’s because the global jihad organizations, from 1915 to this very day, from al-Shabaab to the Taliban, from Hamas to Islamic State, from Boko Haram to al-Qaeda, share the same ideology: Imposing Islam’s rule on the entire world.

Islamic State leader Abu Bakr al-Baghdadi said several weeks that the plan is to take over Rome. Why Rome? Yunis al-Astal, a Palestinian Parliament member on behalf of Hamas, explained even before the IS declaration that Rome must be conquered because it is “the capital of the Catholics, or the Crusaders.” All stops lead to Rome, including Sydney.

Most Muslims, including in Australia, are not jihad supporters. The problem, as always, is with the radical minority, which is trying to impose a nightmare. The problem is that the minority acts. Thousands of Westerners are joining ISIS. Not a single Muslim has come out of the West to join the battle against IS.

The Israeli-Arab conflict, or Israeli-Palestinian conflict, is becoming more religious. This change has another aspect. The West is very biased against Israel when it comes to the national conflict, the settlements, the occupation. The overdone support for a nonexistent Palestinian state is proof of that.

But on the other hand, as the conflict becomes more religious, there is much more solidarity with the Israeli side. Because then, the war is not against Israel. The war is against Sydney and Rome.

It’s true that the delusional margins in the left will continue to understand jihad, offer explanations for it and blame Israel. But the majority in the West is beginning to show signs of repulsion. It is running out of patience.

“It’s okay that they don’t want to be like us,” a Norwegian journalist told me candidly, “but it’s unacceptable that they want us to be like them.”

But when we went back to talk about Israel, he returned to the old slogans.

What is happening in Australia won’t wake the free world from its slumber. But another small alarm bell rang Monday. Let’s just hope that the wake-up call won’t arrive with a festival of bells.

A Dangerous Holiday

http://canadafreepress.com/index.php/article/68384

By Daniel Greenfield  December 17, 2014

Holidays are a calendar. They mark points in emotional and physical time. They remind of us who we are.

Many of those celebrating Chanukah celebrate a holiday that does nothing more than celebrate ‘celebration’, the rituals and rites of entertainment, a special food, a symbol whose meaning they don’t remember and a little family fun.

The great irony of Chanukah is that those likeliest to strip away its historical and religious meaning would have been fighting against the Macabees. The battle to preserve the meaning of Chanukah is part of the struggle to preserve the Jewish traditions and culture that the left attacks.Chanukah is many things but it is not a safe holiday. It is a victory celebration in a guerrilla war. It is a reminder that Obama’s war on Jerusalem was preceded long before him by Antiochus’s war on Jerusalem. It is a brief light in a period of great darkness.

Today’s struggle for Jerusalem, for Judaism, for freedom of religion and a meaningful life continues that same old struggle of Chanukah.

The overt militarism of the Chanukah story has made it an uncomfortable fit for liberal Jews who found it easier to strip away its dangerous underlying message that a time comes when you must choose between the destruction of your culture and a war you can’t win. In those dark days a war must be fought if the soul of the nation is to survive.

There are worse things than death and slavery, the fate that waited for the Maccabees and their allies had they failed, the fates that came anyway when the last of the Maccabees were betrayed and murdered by Caesar’s Edomite minister, whose sons went on to rule over Israel as the Herodian dynasty.

Nations can survive the mass murder of their bodies, but not the death of their spirit. A nation does not die, until its soul dies, and the soul of a nation is in its culture and its faith, not in the bodies of its citizens.A nation does not die, until its soul dies, and the soul of a nation is in its culture and its faith

Tonight that first candle, that first glimmer of flame over oil, marks the night that the Maccabee forces entered Jerusalem, driving out the enemy armies and their Jewish collaborators, and reclaiming their people’s culture and religio

The light of the flame was a powerful message sent across time that even in the darkest hour, hope was not lost. And Divine Providence would not abandon the people. Time passed the Maccabees fell, Jerusalem was occupied and ethnically cleansed over and over again, and still the menorah burned on. A covert message that still all hope was not lost. That Israel would rise again.

Israel had used signal fires and torches held up on mountain tops to pass along important news. The lighting of the menorah was a miniature signal fire, a perpetuation of the temple light, its eight-day light a reminder that even the smallest light can burn beyond expectation and light beyond belief and that those who trust in G-d and fight for the freedom to believe in Him, should never abandon hope.

That divine signal fire first lit in the deserts by freed slaves has been passed on for thousands of years. Today the menorah is on the seal of the State of Israel, the product of a modern day Chanukah. The mark of a Jerusalem liberated in a miracle of six days, not eight. Six as in the number of the original temple Menorah. And the one on the seal as well.

For those liberals who believe that Jewish identity should be limited to donating to help Haiti, agitating for illegal aliens and promoting the environment; Chanukah is a threatening holiday. They have secularized it, dressed it up with teddy bears and toys, trimmed it with the ecology and civil rights of their new faith. Occasionally a Jewish liberal learns the history of it and writes an outraged essay about nationalism and militarism, but mostly they are content to bury it in the same dark cellar that they store the rest of the history of their people and the culture that they left behind.

Holidays aren’t mere parties, they are messages. Knots of time that we tie around the fingers of our lives so that we remember what our ancestors meant us to never forget. That they lived and died for a reason. The party is a celebration, but if we forget what it celebrates, then it becomes a celebration of celebration. A hollow and soulless festival of the self. The Maccabees fought because they believed they had something worth fighting for. Not for their possessions, but for their traditions, their families and their G-d. The celebration of Chanukah is not just how we remember them, but how we remember that we are called upon to keep their watch. To take up their banner and carry their sword.

History is a wheel and as it turns, we see the old continents of time rising again, events revisiting themselves as the patterns of the past become new again. Ancient battles become new wars. And old struggles have to be re-fought again until we finally get them right.

Over two thousand years after Chanukah, Jews are still not allowed to live in peace in Modiin

Modiin, the rural center of the old Maccabee resistance, is a revived city today, larger than it ever was. Modiin-Maccabim has some 80,000 people living there. In the ancient days, this was where the Maccabee clan rose against the Seleucid conquerors over religious freedom. Today it is a place that the European Union labels an illegal settlement. A place that Jews have no right to live even though it is within sight of the Maccabees who lived and died there. Over two thousand years after Chanukah, Jews are still not allowed to live in peace in Modiin.

The new Maccabees are farmers and teachers, men and women who build families and homes in the lands of their ancestors, who brave the threats of terrorists and international tyrants to live their lives and raise their children. Knowing that they will not be allowed to live in peace, that everything they stand for is hated by the UN, in the capitals of great empires and even by their own government, they still put flame to wick and mark the first day of many days of the miracle that revived the spirit of a nation and inspires it to this day.

Not only may Jews not live in Modiin, but they may not live in Jerusalem either. And yet they do. They persist, to the eternal frustration of empires, in this quiet resistance of building a future with their buildings, their bodies and their lives. They persist in living where so many would like them to die. And they persist in lighting the menorah when so many would rather that it be forgotten.

The Jew today is called on to forget. To turn his children into bricks in order to construct the utopia of their new world order. To bend to the progressive wheel and wear the social justice chain, and cast his own offspring into the sea of zero population growth. To give up his nation, his land, his faith and his future to toil in the shadow of the pyramids of socialism. To go down to labor in Egypt once more, in South America and Haitian slums, in barrios and villages, in ghettos and madinas, to give up who he is in order to serve others in the new slavery of social justice.

It takes courage to resist physical oppression, but it takes even greater courage to resist cultural oppression. The terms of physical resistance are easy to understand. Force is used against force. Cultural resistance is far more difficult, and by the time the necessity for it is apparent, it can often be too late.The Maccabees had to resist not only physical oppression and armed force, but the cultural oppression of a system that regarded their monotheism, their nationalism, their traditions and rituals as barbaric. A system that much of their own fellow Jews had already accepted as right and proper.

The Maccabees rose up not only against physical oppression, Israel had and would face that over and over again, they rose up against an assault on their religious and cultural identity.  The lighting of the Menorah is the perpetuation of that cultural resistance and when it is performed properly then it reminds us that cultural oppression, like physical oppression, is ubiquitous, and that just as the forms of cultural oppression can often go unnoticed, so too the resistance to it can go unnoticed as well.

Every year that we celebrate Chanukah, the left makes another attempt to “desecrate the temple” by destroying its meaning and replacing it with the usual grab bag of social justice issues under the union label of “Tikkun Olam”. And each time we push back against their ruthless assault on Jewish history and tradition the same way that the Maccabees did, by reclaiming our sacred places, cleaning away the filth left behind by the occupiers, and lighting the Menorah to remind us of who we are.

Chanukah marks the culmination of the Maccabee campaign for the liberation of Jerusalem. It is the time when we remember the men and women who refused to submit to the perversion of their values and the theft of their land. It reminds us that we must not allow our land to be stolen under any guise or allow our religion, history and culture to be perverted on any pretext. The light of the Menorah reminds us that the sacredness of a nation is in its spirit and that preserving that spirit is an eternal struggle against the conquerors of land and the tyrants of souls.

Chanukah is a Holiday of Resistance. It commemorates the physical and spiritual resistance that is required of us sooner or later in all times. Chanukah takes us back to the armed resistance and the moral awakening that liberated Jerusalem and connected the Jewish people with their G-d once again. And that reminds us to never give up, not in the face of an assault on our bodies or on our culture. The lights go out, but they are lit again, each day, for thousands of years, reminding us to hold on to our traditions and our faith, rather than trade them in for the trendy trinkets and cheap jewelery of progressive liberalism.

To light the menorah on Chanukah is to pass on a signal fire that has been kept lit for thousands of years. From the first holiday of Passover, after which the freed slaves kindled the first Menorah, to the final holiday of Chanukah, that light burns on. The historical cycle of Jewish holidays begins with Moshe confronting Pharaoh and demanding the freedom of the Jewish people. It ends with the Maccabees standing up to the tyranny of Antiochus and fighting for the right of the Jewish people to live under their own rule on their own land.

The lights of the menorah embody the spirit of the Jewish people. A spirit that has outlived the atrocities of every tyrant. In the heart of the flame that has burned for a thousand years lives the soul of a people.

Palestinians set deadline for Israeli occupation

http://news.yahoo.com/palestinians-submit-draft-un-vote-095411147.html

UNITED NATIONS (AP) — Israel suffered back-to-back diplomatic setbacks in Europe on Wednesday, while the Palestinians at the United Nations set a deadline for an Israeli withdrawal from lands captured nearly 50 years ago by the end of 2017.

In Geneva, the international community delivered a stinging rebuke to Israel’s settlement construction in the West Bank and east Jerusalem, saying the practice violates Israel’s responsibilities as an occupying power.

The declaration adopted by the conference of the Fourth Geneva Convention, which governs the rules of war and military occupation, emphasized a prohibition on colonizing occupied land and insisted that international humanitarian law be obeyed in areas affected by the conflict between Israel and Palestinians. It called for “all serious violations” to be investigated and those responsible for breaches to be brought to justice.

“This is a signal and we can hope that words count,” said Swiss ambassador Paul Fivat, who chaired the one-day meeting. The U.S. and Israel did not take part.

Israel’s U.N. Mission blasted the gathering, saying: “It confers legitimacy on terrorist organizations and dictatorial regimes wherever they are, while condemning a democratic country fighting terrorism in accordance with international law.”

In Luxembourg, meanwhile, a European Union court ordered the Palestinian group Hamas removed from the EU terrorist list for procedural reasons but said the 28-nation bloc can maintain asset freezes against Hamas members for now.

The Islamic militant group, which calls for the destruction of Israel, hailed the decision, but Israeli Prime Minister Benjamin Netanyahu expressed outrage.

“It seems that too many in Europe, on whose soil 6 million Jews were slaughtered, have learned nothing,” Netanyahu said, adding that Israel would continue to defend itself “against the forces of terror and tyranny and hypocrisy.”

The EU court ruled that the terrorist listing of Hamas was based on press and Internet reports and not on “acts examined and confirmed in decisions of competent authorities.”

The EU, which has two months to appeal, was considering its next step.

In New York, an Arab-backed draft resolution on ending Israel’s occupation of lands captured in 1967 was submitted Wednesday evening to the U.N. Security Council for a possible vote, Palestinian Ambassador Riyad Mansour said.

However, Mansour said the Arab-backed resolution does not close the door on further negotiations on the issue, including with the United States, “if they are ready and willing.” The U.S., as a permanent council member, often has vetoed measures targeting Israel in the past.

And Palestinian Foreign Minister Riad Malki earlier said the actual vote might be put off, suggesting a compromise is in the works to avoid a clash in the council.

The draft, sponsored by Jordan on behalf of the Palestinians, sets the end of 2017 as a deadline for an Israeli withdrawal from war-won lands the Palestinians are seeking for a state. The deadline has been pushed back from that of November 2016 in the earlier draft.

Israel fiercely opposes any suggestions that the Security Council can set a framework for Israeli-Palestinian negotiations, which broke down again in the spring after the two sides couldn’t agree on the ground rules.

The resolution also welcomes the idea of holding an international conference to launch negotiations on reaching a peace agreement.

The United States was scrambling Wednesday to avert a showdown at the Security Council. U.S. Secretary of State John Kerry was talking to European and Arab foreign ministers about a potential meeting this weekend in the Mideast, possibly with Palestinian President Mahmoud Abbas.

In Washington, State Department spokeswoman Jen Psaki said the Obama administration is studying the EU’s court decision but the U.S. continues to consider Hamas as a terrorist organization.

The U.S. hasn’t said how it would respond to the Jordanian resolution, but Kerry took a hard line in meetings this week in Europe against any effort that could interfere with Israel’s elections in mid-March.

“We want to find the most constructive way of doing something that therefore will not have unintended consequences, but also can stem the violence,” Kerry told reporters in London on Tuesday. He said the situation marks “a particularly sensitive moment” given rising tensions between Israel and Palestinians.

Israel did one win diplomatic engagement in Europe on Wednesday, this one at the European Parliament. The lawmakers meeting in Strasbourg, France, stopped short of pushing for an outright recognition of a Palestinian state, urging renewed peace talks instead.

Legislators voted 498-88 in favor of a compromise resolution supporting “in principle recognition of Palestinian statehood” — but as part of a two-state solution with Israel. The resolution supports two states on the basis of 1967 borders, with Jerusalem as the capital of both.

Goldcore: Is Russia Being Driven Into the Arms of China?

http://www.goldcore.com/us/gold-blog/

The “isolation of Russia” idea is one which has been receiving a lot of traction of late. Russia’s recent economic woes have sometimes been covered with barely contained glee despite the hardships that average Russians may have to endure if the rouble continues to collapse … not to mention the inevitable geo-political backlash.


Reuters image of the over 50% drop in the Rouble against the U.S. dollar

Russia has become isolated from its western neighbours on account of the putsch in Ukraine which led to the predominantly ethnically Russian Crimea seceding from Kiev through a democratic process.

European governments slavishly adhere to U.S. imposed sanctions. So from a western elite point of view, Russia is indeed isolated.

Whether antagonising Russia is damaging to Russia is a moot point. Certainly in Russia’s current straits the bankrupt west is in no position to help. European farmers are suffering from loss of export markets while Europe is still dependent on Russian natural gas.

So how “isolated” is Russia in reality?

Firstly, it is worth pointing out the obvious fact that countries do not have “friends”, just “interests”. Representatives of countries may have good relationships but these are built on expediency – not friendship.

So while there may be a great deal of distrust between the major powers of Asia these issues are being overlooked for now because it is expedient. Standards of living across the board have been rising in Asia for twenty years. It is in no countries interest to enter into conflict.

By contrast, the west – led by the U.S. – has seen a remarkable fall in living standards over the same period. The bubble, prior to the 2008 crash, was not a golden-age for families as increasingly both parents were forced to work to just afford a roof over their heads.

Premier Li Keqiang at Moscow’s Tomb of the Unknown Soldier during his Russian trip in October

The relationship between Russia and China has morphed with these changes. Russia supplies China with hi-tech military hardware. Russia has negotiated two major natural gas deals with China in the last year. China expects to double it’s gas usage by 2030. So from a Chinese point of view it is certainly expedient to keep Russia on side.

China may soon come to Russia’s aid and provide liquidity according to the South China Morning Post:
“Russia could fall back on its 150 billion yuan (HK$189.8 billion) currency swap agreement with China if the rouble continues to plunge”.

If the swap deal is activated for this purpose, it would mark the first time China is called upon to use its currency to bail out another currency in crisis. The deal was signed by the two central banks in October, when Premier Li Keqiang visited Russia.

“Russia badly needs liquidity support and the swap line could be an ideal tool,” said Bank of Communications chief economist, Lian Ping.

The swap allows the central banks to directly buy yuan and rouble in the two currencies, rather than via the U.S .dollar.

This highlights the long-term error of the west – pushing Russia into China’s sphere of influence.

For the first time in fifty years a country may be bailed out using a currency other than the dollar.

This, possibly, paves the way for the Chinese Yuan to assume the role of a global reserve currency.

Also, it is worth noting that a weak Russia is not in China’s military interest at this time of simmering geopolitical tensions.

In the event of problems in the international monetary system – sellers of tangible wealth will want payment in a currency with some intrinsic value.

GoldCore Insight: Currency Wars: Bye, Bye Petrodollar – Buy, Buy Gold

MARKET UPDATE
Today’s AM fix was USD 1,210.75, EUR 982.03 and GBP 773.64 per ounce.
Yesterday’s AM fix was USD 1,199.00, EUR 962.36 and GBP 763.16 per ounce.

Spot gold fell $7.40 or 0.62% to $1,188.90 per ounce yesterday and silver rose $0.03 or 0.19% to $15.77 per ounce.

Spot gold in London rose over 2% after the Federal Reserve stated yesterday that it would take a patient approach towards increasing interest rates. This led to rising stock and commodities markets and hurt the U.S. dollar.

Gold in Singapore rose nearly 1% to $1,202.08 an ounce, and traded at $1,201.11 at 2:49 p.m. in Singapore, noted Bloomberg.

U.S. Fed chief, Janet Yellen, said the Fed was not likely to raise rates for “at least a couple of meetings”, this has market participants focused on April 2015.
In London, spot gold climbed 1.8% to $1,209.46 an ounce after 1040 GMT.

Comex U.S. February gold was up 1.3% at $1,209.90 an ounce. Spot silver gained 3.2% to $16.19 an ounce.

Spot platinum was up 2.2% at $1,212.60 an ounce, while spot palladium rose 1.8% to $789.63 an ounce.

Financial Market Manipulation Is The New Trend: Can It Continue? Paul Craig Roberts

http://www.paulcraigroberts.org/2014/12/17/financial-market-manipulation-new-trend-can-continue/

Financial Imperialists Attack Russia

A dangerous new trend is the successful manipulation of the financial markets by the Federal Reserve, other central banks, private banks, and the US Treasury. The Federal Reserve reduced real interest rates on US government debt obligations first to zero and then pushed real interest rates into negative territory. Today the government charges you for the privilege of purchasing its bonds.

People pay to park their money in Treasury debt obligations, because they do not trust the banks and they know that the government can print the money to pay off the bonds. Today Treasury bond investors pay a fee in order to guarantee that they will receive the nominal face value (minus the fee) of their investment in government debt instruments.

The fee is paid in a premium, which raises the cost of the debt instrument above its face value and is paid again in accepting a negative rate of return, as the interest rate is less than the inflation rate.

Think about this for a minute. Allegedly the US is experiencing economic recovery. Normally with rising economic activity interest rates rise as consumers and investors bid for credit. But not in this “recovery.”

Normally an economic recovery produces rising consumer spending, rising profits, and more investment. But what we experience is flat and declining consumer spending as jobs are offshored and retail stores close. Profits result from labor cost savings from employee layoffs.

The stock market is high because corporations are the biggest purchases of stock. Buying back their own stock supports or raises the share price, enabling executives and boards to sell their shares or cash in their options at a profitable price. The cash that Quantitative Easing has given to the mega-banks leaves ample room for speculating in stocks, thus pushing up the price despite the absence of fundamentals that would support a rising stock market.

In other words, in America today there are no free financial markets. The markets are rigged by the Federal Reserve’s Quantitative Easing, by gold price manipulation, by the Treasury’s Plunge Protection Team and Exchange Stabilization Fund, and by the big private banks.

Allegedly, QE is over, but it is not. The Fed intends to roll over the interest and principle from its bloated $4.5 trillion bond portfolio into purchases of more bonds, and the banks intend to fill in the gaps by using the $2.6 trillion in their cash on deposit with the Fed to purchase bonds. QE has morphed, not ended. The money the Fed paid the banks for bonds will now be used by the banks to support the bond price by purchasing bonds.

Normally when massive amounts of debt and money are created the currency collapses, but the dollar has been strengthening. The dollar gains strength from the
rigging of the gold price in the futures market. The Federal Reserve’s agents, the bullion banks, print paper futures contracts representing many tonnes of gold and dump them them into the market during periods of light or nonexistent trading. This drives down the gold price despite rising demand for the physical metal. This manipulation is done in order to counteract the effect of the expansion of money and debt on the dollar’s exchange value. A declining dollar price of gold makes the dollar look strong.

The dollar also gains the appearance of strength from debt monetization by the Bank of Japan and the European Central Bank. The Bank of Japan’s Quantitative Easing program is even larger than the Fed’s. Even Switzerland is rigging the price of the Swiss franc. Since all currencies are inflating, the dollar does not decline in exchange value.

As Japan is Washington’s vassal, it is conceivable that some of the money being printed by the Bank of Japan will be used to purchase US Treasuries, thus taking the place along with purchases by the large US banks of the Fed’s QE.

The large private US and UK banks are also manipulating markets hand over fist. Remember the scandal over the banks fixing the LIBOR rate (the London Interbank Borrowing Rate) and the opening gold price on the London exchange. Now the banks have been caught rigging currency markets with algorithms developed to manipulate foreign exchange markets.

When the banks get caught in felonies, they avoid prosecution by paying a fine. You try doing that.

The government even manipulates economic statistics in order to paint a rosy economic picture that sustains economic confidence. GDP growth is exaggerated by understating inflation. High unemployment is swept under the table by not counting discouraged workers as unemployed. We are told we are enjoying economic recovery and have an improving housing market. Yet the facts are that almost half of 25 year old Americans have been forced to return to live with their parents, and 30% of 30 year olds are back with their parents. Since 2006 the home ownership rate of 30 year old Americans has collapsed.
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The repeal of the Glass-Steagall Act during the Clinton regime allowed the big banks to gamble with their depositors’ money. The Dodd-Frank Act tried to stop some of this by requiring the banks-turned-gambling-casinos to carry on their gambling in subsidiaries with no access to deposits in the depository institution. If the banks gamble with depositors money, the banks’ losses are covered by FDIC, and in the case of bank failure, bail-in provisions could give the banks access to depositors’ funds. With the banks still protected by being “too big to fail,” whether Dodd-Frank would succeed in protecting depositors when a subsidiary’s failure pulls down the entire bank is unclear.

The sharp practices in which banks engage today are risky. Why gamble with their own money if they can gamble with depositors’ money. The banks led by Citigroup have lobbied hard to overturn the provision in Dodd-Frank that puts depositors’ money out of their reach as backup for certain types of troubled financial instruments, with apparently only Senator Elizabeth Warren and a few others opposing them. Senator Warren is outgunned as Citigroup controls the US Treasury and the Federal Reserve.

The falling oil price has brought concern that oil derivatives are in jeopardy. Citigroup has a provision in the omnibus appropriations bill that shifts the liability for Citigroup’s credit default swaps to depositors and taxpayers. It was only six years ago that Citigroup was bailed out to the tune of a half trillion dollars. Already Citigroup is back for more while nothing whatsoever is done to bail the American people out of their hardships caused by Citigroup and the other financial gangsters.

What we are experiencing is not a repeat of the past. The ability or, rather, the audacity of the US government itself to manipulate the major financial markets is new. Can this new trend continue? The government is supposed to be the enforcer of laws against market manipulation but is itself manipulating the markets.

Governments and economists take their hats off to free markets. Yet, the markets are rigged, not free. How long can stocks stay up in a lackluster or declining economy? How long can bonds pay negative real interest rates when debt and money are rising. How long can bullion prices be manipulated down when the world’s demand for gold exceeds the annual production?

For as long as governments and banks can rig the markets.

The manipulations are dangerous. Manipulations blow a bigger bubble economy, and manipulations are now being used by Washington as an act of war by driving down the exchange value of the Russian ruble.

If every time the stock market tries to correct and adjust to the real economic situation, the plunge protection team or some government “stabilization” entity stops the correction by purchasing S&P futures, unrealistic values are perpetuated.

The price of gold is not determined in the physical market but in the futures market where contracts are settled in cash. If every time the demand for gold pushes up the price, the Federal Reserve or its bullion bank agents dump massive amounts of uncovered futures contracts in the futures market and drive down the price of gold, the result is to subsidize the gold purchases of Russia, China, and India. The artificially low gold price also artificially inflates the value of the US dollar.

The Federal Reserve’s manipulation of the bond market has driven bond prices so high that purchasers receive a zero or negative return on their investment. At the present time fear of the safety of bank deposits makes people willing to pay a fee in order to have the protection of the government’s ability to print money in order to redeem its bonds. A number of events could end the tolerance of zero or negative real interest rates. The Federal Reserve’s policy has the bond market positioned for collapse.

The US government, perhaps surprised at the ease at which all financial markets can be rigged, is now rigging, or permitting large hedge funds and perhaps George Soros, to drive down the exchange value of the Russian ruble by massive short-selling in the currency market. On December 15 the ruble was driven down 19%.

Just as there is no economic reason for the price of gold to decline in the futures market when the demand for physical gold is rising, there is no economic reason for the ruble to suddenly loose much of its exchange value. Unlike the US, which has a massive trade deficit, Russia has a trade surplus. Unlike the US economy, the Russian economy has not been offshored. Russia has just completed large energy and trade deals with China, Turkey, and India.

If economic forces were determining outcomes, it would be the dollar that is losing exchange value, not the ruble.

The illegal economic sanctions that Washington has decreed on Russia appear to be doing more harm to Europe and US energy companies than to Russia. The impact on
Russia of the American attack on the ruble is unclear, as the suppression of the ruble’s value is artificial.

There is a difference between economic factors causing foreign investors to withdraw their capital from a country, thereby causing the currency to lose value, and manipulation of a currency’s value by heavy short-selling in the currency market. The latter can cause the former also to occur. But the outcome for Russia can be positive.

No country dependent on foreign capital is sovereign. A country dependent on foreign capital, especially from enemies seeking to subvert the economy, is subject to destabilizing currency and economic swings. Russia should self-finance. If Russia needs foreign capital, Russia should turn to its ally China. China has a stake in Russia’s strength as part of China’s protection from US aggression, whether economic or military.

The American attack on the ruble is also teaching sovereign governments that are not US vassals the extreme cost of allowing their currencies to trade in currency markets dominated by the US. China should think twice before it allows full convertibility of its currency. Of course, the Chinese have a lot of dollar assets with which to defend their currency from attack, and the sale of the assets and use of the dollar proceeds to support the yuan could knock down the dollar’s exchange value and US bond prices and cause US interest rates and inflation to rise. Still, considering the gangster nature of financial markets in which the US is the heavy player, a country that permits free trading of its currency sets itself up for trouble.

The greatest harm that is being done to the Russian economy is not due to sanctions and the US attack on the ruble. The greatest harm is being done by Russia’s neoliberal economists.

Neoliberal economics is not merely incorrect. It is an ideology that fosters US economic imperialism. By following neoliberal prescriptions, Russian economists are helping Washington’s attack on the Russian economy.

Apparently, Putin has been sold, along with his internal enemies, the Atlanticist integrationists, on “free trade globalism.” Globalism destroys the sovereignty of every country except the world reserve currency country that controls the system.

As Michael Hudson has shown, neoliberal economics is “junk economics.” But it is also a tool of American financial imperialism, and this makes neoliberal Russian economists tools of American imperialism.

The remaining sovereign countries, which excludes all of Europe, are slowly learning that Western economic institutions are deceptive and that placing trust in them is a threat to national sovereignty.

Washington intends to subvert Russia and to turn Russia into a vassal state like Germany, France, Japan, Canada, Australia, the UK and Ukraine. If Russia is to survive, Putin must protect Russia from Western economic institutions and Western trained economists.

It is too risky for the US to take on Russia militarily. Instead, Washington is using its unique symbiotic relationship with Western financial institutions to attack an incautious Russia that foolishly opened herself to Western financial predation.

What’s Behind the Riots? A Federal Police Force: “Everything else has been nationalized, so why not the police?”

http://www.shtfplan.com/headline-news/whats-behind-the-riots-a-federal-police-force-everything-else-has-been-nationalized-so-why-not-the-police_12172014

Mac Slavo

Michael Brown. Eric Garner. Tamir Rice. And who could forget? Trayvon Martin.

It’s no secret that the likes of Attorney General Eric Holder, his replacement Loretta Lynch, President Obama and Al Sharpton have been dwelling upon these cases, while others with similar dimensions and often more tragic circumstances remain ignored. Scores of members in Congress joined in the chorus as well.

But why are they driving these cases at all? These are not altruistic players. What is their agenda?

In the wake of the chaos of riots and the mass movement of protests taking over cities across the nation, a clearer picture is beginning to emerge.

All the justified anger over police abuse isn’t brewing more justice, but more power for the federal government.

Let’s rewind…

Police abuse has become so epidemic that the streets are filling with protests against its most publicized cases.

Yet, who gave police the tanks, weapons and military equipment of war? The Pentagon, under its surplus program.

Who trained police to regard every individual as a potential terrorist in America?Homeland Security and the FBI issued the definitions, wrote the propaganda, put out thememos and conducted the training exercises.

Who funded police to increase arrests and fill the jails with non-violent offenders? Washington and their federal grants, that’s who. It’s what paid off local police departments to do so.

The Justice Department and Washington want more control over local police forces, and may be building a national police force as well. They are trying to change things, once again, through a popular groundswell and a series of civil rights lawsuits.

The St. Louis Dispatch reported:

Spurred by the Ferguson, Missouri, shooting and other recent cases of deadly encounters involving police, Congress in its final hours of work for the year passed legislation requiring states to report deaths of people arrested or detained by police to the attorney general.

The measure requires states that receive federal aid for crime control, law enforcement assistance and other programs to report on a quarterly basis the death of anyone in police custody. It imposes penalties for states that don’t comply.

Godfather Politics made the case for this data reporting legislation as a means to an end – to use evidence of systematic racism in police departments to, in turn, justify federal reform. Ultimately, the U.S. could even see a national police force using the leverage of federal aid money to establish control. Is that the dream that Martin Luther King, Jr. and other civil rights leaders had?:

And in typical fashion, this is how the feds always co-opt the states: money. One could just picture the feds saying, “You didn’t actually think there would be no strings attached when you took our money, did you?”

Now to the untrained eye this may not seem like a big deal, but to the trained eye, or some would say, to the wacky conspiracy theorist that sees things that aren’t there, this is indeed another step toward their goal.

[…]
All we want to do is compile some data, crunch some numbers, that’s all. It’s not like this data would ever show us tendencies toward racism. That’s not what we’re actively looking for as an excuse for the Justice Department’s civil rights division to sue you into submission. No, we’ll let you decide the outcome of the inevitable civil rights lawsuit against your city’s police department.

[…]
Those behind this scheme must maintain this level of hatred toward local police to achieve their goal.

Everything else has been nationalized, so why not the police?

This national police force can’t happen all at once. No one would ever accept that. Like all leftist ideas, it must be incremental and opportunist. The architects, whoever they are, must be prepared to react when a “good crisis” arises so as not to waste the opportunity. Opportunities like Michael Brown, Eric Gardner, and Tamir Rice.

A National Police Force? Before that becomes a visible, oppressive uniformed SS force imposed across the country (perhaps it will someday), it will rear its ugly head from the inside-out, using more federal money to address the problem-reaction-solution at hand, using federal policy to establish federal control over police.

The trend is already underway, and with dangerous consequences. Consider what has already happened under Clinton’s crime bill and Bush’s PATRIOT Act…

President Clinton instituted a sweeping federal initiative to reform police, famously pledging to put an additional 100,000 police on the streets by 2000 through COPS, the Community Oriented Policing Services launched in 1994.

In theory, it addressed some of the same problems that Obama, Holder and the Ferguson case are attempting to address. Following the 1991 Rodney King beating and subsequent riots, the Justice Department began to use “pattern or practice” lawsuits against police departments. Only a few short years later, the COPS program used federal dollars and the guise of “community policing” to grant huge “gifts” to thousands of police departments, and with it, strings attached.

And with it, a backlash of the surface intentions of the program:

Many departments that have gotten large amounts of money from COPS, such as New York and Chicago, have been plagued with persistent complaints of excessive force against suspects—the opposite of what community policing promises.

At best, the COPS program was a misguided solution to crime. As Slate pointed out, violent crime peaked in 1994, just when COPS was introduced, and murder was already falling by 1991:

A 1999 investigation by the Chicago Tribune that looked at the nation’s 50 largest police departments found “no correlation between the growth in the number of officers and crimes rates since 1993.”

But, of course, centralized power was the real agenda.

The Heritage Foundation pointed out the unconstitutional concentration of federal power under the COPS program, seriously infringing upon the separation of powers framed in the Constitution:

Federal grant programs that fund the routine, day-to-day functions of state and local law enforcement are of questionable constitutionality. When Congress subsidizes local law enforcement in this manner, it effectively reassigns to the federal government the powers and responsibilities that fall squarely within the… constitutional authority of state and local governmentsthe federal government was never understood to have a general police power.

Reuters just published a report warning of the “unintended consequences” of the Justice Department “fixing” what is wrong with Ferguson and the other cases:

In the aftermath of the deaths of Michael Brown in Ferguson, Missouri, and Eric Garner in Staten Island, New York, protesters across the nation are looking to Washington for action and answers.

While arguing that the federal government “can and should” influence changes in criminal justice policy, Reuters also points out the drastic damage that has already been done:

One piece of federal legislation, the 1994 crime bill, has played a pivotal role in the incarceration epidemic. The law, which was designed to reduce crime, gave states $9 billion to pass laws that would increase time spent behind bars.

The result, however, was an explosion in state prison populations that has made the United States the world’s largest jailor. The United States has 5 percent of the world’s population, but 25 percent of its prisoners. This has immense fiscal, economic and social consequences — each prisoner costs taxpayers, on average, $30,000 a year, and inmates with criminal records, even for minor offenses, face significant challenges re-entering society. The racial disparities are also vast. One in three black men can expect to spend time behind bars.

Today, the federal government annually sends states and cities more than $4 billion… What the federal government chooses to fund, however, creates incentives for local police. For example, Washington’s funding priorities have supported mass incarceration by concentrating on the number of arrests and seizures police make, rather than tabulating the number of offenders diverted to mental health or drug treatment programs.

The federal government would indeed love to establish a viable national police force.

The feds are now, with the left hand, scolding police for their shameful examples of excessive force and civil rights violations while, with the right hand, giving local departments new toys, “gift money” and ideology to regard average citizens as mortal enemies and potential terrorists.

Some form of a national police is underway, and it doesn’t look pretty.

In steps towards that end, the feds have drastically increased their “joint efforts” and “shared visions” with local and state police in the wake of 9/11 and the creation of Homeland Security as the overarching umbrella organization. Expensive and technological advanced Fusion Centers have been set up across the country to share information up and down the chains of command and across jurisdiction, allowing local, as well as private, police to use federal data not only to track criminals, but to profile individuals before they become suspects and without warrants – including political activists and community groups.

More recently, the use of “sting ray” technology and other forms of extrajudicial cell phone data collection has been used controversially by local police and other entities – and these new toys have been given to departments by the FBI, under the Justice Department, with the condition of oversight and training by the feds.

A Justice Department presentation on COPS identified how increasingly, the approximately 18,000 local police departments are entering into private-public partnerships with the more than 2 million private security/police forces and the 90,000 federal law enforcement officials in a “shared vision” that includes plenty of shared data and power.

U.S. Gold EXPORTS Jump 70% In September

http://srsroccoreport.com/u-s-gold-exports-jump-70-in-september/u-s-gold-exports-jump-70-in-september/

According to the USGS most recent data, total U.S. gold exports increased significantly in September.  Not only did U.S. gold exports surge in September, they were 70% higher than the previous month.  This was probably due to increased demand as the price of gold declined $80 during the month.

U.S. exports started off very strong in January, reaching 80 mt (metric tons) with the majority heading to Hong Kong.  However, gold exports fell to 47 metric in February and dropped even further in March at 30 mt. If we look at the chart below, U.S. gold exports continue to remain weak from April to August until the spike up in September:

Total U.S. Gold Exports Last 6 Months

As we can see, total gold exports for each month were less than 30 mt.  However, when the price of gold fell to a new low, gold exports increased to 50 mt.  The majority of gold exports in September were shipped to Switzerland, the U.K. and Hong Kong:

Total U.S. Gold Exports Sept 2014

China also received a direct shipment of 3.3 mt of gold while Thailand imported 3 mt, Italy 2.6 mt, Singapore 2 mt, and the UAE 1.5 mt.  What is interesting here is the 2.6 mt of U.S. gold exported to Italy.  Italy has imported gold scrap from the U.S., but not much in the way of gold bullion.

Matter-a-fact, I went back and looked at the past ten years of USGS Gold Yearbooks and only found one entry listing U.S. gold bullion exports to Italy in 2009 at a paltry 21 kilograms, which is 653 troy ounces.  Compare that to the 2.6 mt or 83,590 troy ounces of gold exported to Italy in September.

U.S. gold exports for the first nine months of 2014 are down compared to the same period last year.  From Q1-Q3 2013, total U.S. gold exports were 573 mt compared to the 370 mt in the first three quarters of 2014.  However, the price of gold fell to a new low in November, thus gold exports from the U.S. may continue to be strong for the remainder of the year.

The Delay In Releasing THE U.S. GOLD MARKET REPORT

I mentioned over a month ago that I had planned to publish my first paid report, THE U.S. GOLD MARKET REPORT.  The report has 25 charts-graphs and is 38 pages long.  I had my web designer working on setting up the new PAID REPORTS PAGE and just when I it was about to go live with it, I found a glaring error in one of the major aspects of the report.

Initially, I thought the U.S. suffered a large cumulative gold deficit between 1981-2013.  I came up with a large deficit using figures provided by the USGS Gold Year books.  The USGS receives its data from the U.S. Census Bureau.

The USGS publishes annual gold import-export data and during some years, exports were very large.  Coincidentally, years showing large exports also listed significant net withdrawals of gold out of the NY Fed.  I assumed part of the gold exported from the U.S. included gold withdrawn from the NY Fed.

I called up Micheal George, the USGS gold specialist and asked him if foreign held gold withdrawn out of the NY Fed was included in the total U.S. gold exports.  He told me that any foreign held monetary gold withdrawn from the NY Fed was not included in the U.S. gold export data.

So with that understanding, I continued with the report.  However, when I was about to publish the report, something just didn’t seem right, so I spent some time researching the details on the foreign held gold at the NY Fed.  I went back to some older USGS Gold Year books in the 1970’s and found out that the USGS actually provided a breakdown in commercial and monetary gold exports.

Unfortunately, the USGS no longer provides a separate accounting of monetary gold exports.. so its very difficult to know how much of the annual net withdrawals of foreign held gold at the NY Fed are exported or sold into the market.  And.. its even more difficult and convoluted than that… I will get into this into more detail in the revised report.

So, some of the 4,000+ metric tons of foreign held gold at the NY Fed withdrawn between 1981-2013 were indeed included in the total U.S. gold exports.  So, now I have decided to totally revamp THE U.S. GOLD MARKET REPORT including data going back until 1971.

I have to say, the more I research these older USGS Gold Yearbooks, the more fascinating data I uncover.  For example, in 1974, the U.S. exported 3.3 million ounces of monetary gold.  Of this amount, 2.58 million oz of monetary gold were shipped to Saudi Arabia.  This is quite interesting due to the fact that the U.S. Arab Oil Embargo started in 1973.

Furthermore, it’s truly amazing how much gold the U.S. exported since 1971… and this doesn’t even include foreign gold held at the NY Fed.  It will take some time to go through all this data, but I believe it will provide the precious metal investor a very interesting report on the dynamics on one of the largest gold markets in the world.

Please check back for new articles and updates at the SRSrocco Report.  You can also follow us at Twitter below:

I’m Not Buying It——Not The Wall Street Rip, Nor The Keynesian Rap

http://davidstockmanscontracorner.com/im-not-buying-it-not-the-wall-street-rip-nor-the-keynesian-dope/?utm_source=wysija&utm_medium=email&utm_campaign=Mailing+List+AM+Wednesday

First comes production. Then comes income. Spending and savings follow. All the rest is debt…….unless you believe in a magic Keynesian ether called “aggregate demand” and a blatant stab-in-the-dark called “potential GDP”.

I don’t.  So let’s start with a pretty startling contrast between two bellwether data trends since the pre-crisis peak in late 2007—debt versus production.

Not surprisingly, we have racked up a lot more debt—notwithstanding all the phony palaver about “deleveraging”.  In fact, total credit market debt outstanding—-government, business, household and finance—-is up by 16% since the last peak—from $50 trillion to $58 trillion. And that 2007 peak, in turn, was up 80% from the previous peak (2001); and that was up 103% from the business cycle peak before that (July 1990).

Yes, the debt mountain just keeps on growing. It now stands 4.2X higher than the $13.6 trillion outstanding just 24 years ago.

As a proxy for “production” I am using non-durable manufactures rather than the overall industrial production index for three good reasons. The former excludes utility output, which incorporates a lot of weather related noise, and also excludes oil and gas production, which, as we are now learning, embodies a whole lot of debt. Besides, if the US economy has any hope of growing, non-durables should not still be migrating off-shore at this late stage of the global cycle; nor are they subject to fashion or lumpy replacement cycles like cars and refrigerators.

Moreover, the virtue of the industrial production index is that it is a measure of physical output, not sales dollars which reflect inflation; or if deflated into “real” terms, the data points are not distorted by Washington’s fudging and finagling of the prices indices.

So how are we doing on production of things the American economy consumes day-in-and-day out?  Well, at the most recent data point for November, production had soared…….all the way back to where it was in January 2003!

That’s right. Domestic output of food and beverages, paper, chemicals, plastics, textiles and finished energy products (e.g. gasoline), to name just a few, has experienced no net growth for nearly 11 years.

Now that’s a lot more informative than the Keynesian GDP accounts, which presume that government output is actually worth something and that do not know the difference between current period “spending” derived from production and “spending” funded by hocking future income, that is, by borrowing.

Stated differently, the current capitalism suffocating regime of Keynesian central banking and extreme financial repression has created systematic bias and noise in the so-called “in-coming data”. These distortions are the result of mis-allocations and malinvestments reflecting artificial sub-economic costs of debt and capital. The resulting bubbles and booms, in turn, cause highly aggregated measures of economic activity to be flattered by the unsustainable production, spending and investment trends underneath at the sector level.

Thus, during the peak-to-peak cycle between 2000 and 2007, industrial production was reported to have generated a modest 1.5% per year growth rate. But that was almost entirely accounted for by construction materials and defense equipment. Production of non-durable manufactured goods during that period, by contrast, expanded at just a 0.2% annual rate.

But, alas, defense production inherently destroyers economic wealth, whether it provides for the national security or not. And the housing and commercial real estate construction boom did not add to permanent output growth and wealth at all; it amounted to a bubble round trip that has gone nowhere on a net basis during the last 11 years. And the graph below which documents this truth is in nominal terms, meaning that real private construction spending for residential housing, offices, retail and other commercial facilities actually declined by 10-15% after inflation during that period.

Stated differently, bubble finance does not create growth; it funds phony  booms that end up as destructive round trips.

Yet, here we are again. The graph below reflects production of oil and gas, coal and other mining products including iron ore and copper. It has soared by 35% since the 2007 peak, and accounts for virtually all of the gain in industrial production ex-utilities over the last seven years.

Yet the plain fact is, the above explosion of mainly oil and gas production did not reflect the natural economics of the free market, and certainly no technological innovation called “fracking”. The later wasn’t a miracle; it was just a standard oilfield production technique that was long known to the industry, if not to CNBC. It became artificially economic during recent years only due to the massive and continuous distortions of both commodity prices and capital costs caused by the world’s central bankers.

Indeed, there are two charts which capture the central bank complicity in the latest bubble distortion of the “in-coming” data. These are the charts of plunging junk bond yields and soaring oil prices which materialized after the world’s central banks went all-in powering-up their printing presses after September 2008.

At the time of the 2008 financial crisis, what remained of honest price discovery in the capital markets caused a hissy fit among traders and money managers—–who had been stuck when the music stopped with hundreds of billions in dodgy junk bonds issued during the prior bubble.  Accordingly, yields soared to upwards of 20% when massively overleveraged LBOs and other financial engineering gambits went bust.

Needless to say, that urgently needed cleansing was stopped cold in its tracks when Bernanke tripled the Fed’s balance sheets in less than a year after the Lehman crisis, and then officially adopted ZIRP and the greatest spree of debt monetization in recorded history. The resulting desperate scramble for yield among professional money managers and home gamers alike caused nominal interest rates on junk to be driven to levels once reserved for risk free treasuries.

But it wasn’t cheap debt alone that fueled the energy bubble. The 10- year graph of the crude oil marker price (WTI) shown below is an even greater artifact of central bank financial repression. The unprecedented global credit expansion since 2005, and especially after the financial crisis in China and the EM, caused several decades worth of normal GDP expansion to be telescoped into an artificially brief period of time.

As a result, demand for industrial commodities temporarily ran far ahead of new capacity—–even as the latter was being fueled by low-cost capital. That’s why iron ore prices, for example, soared from $20 per ton prior to the China boom to $200 per ton at the peak in 2012, and have now plummeted all the way back to $60 ton. This implosion is still not over. Owing to this extended period of artificial sky-high prices for  the iron ore commodity, the massive investment boom they triggered in mining capacity and transportation infrastructure is still coming on-stream, adding even more increments to supply even as prices plunge.

Call it “operation twist” compliments of central bank bubble finance. It embodies a temporally twisted imbalance of supply and demand that inherently results from false prices in the capital and commodity markets.

Yet this condition is neither sustainable nor stable. Indeed, now we see the back side of this central bank bubble cycle as capacity races past sustainable consumption requirements, causing prices, profits margins and new investment to plunge in a violent correction. Iron ore is just the canary in the mine shaft. The same thing is true of nickel, copper, aluminum and most especially hydrocarbon liquids.

So the oil price chart below does not represent a momentary dip. This time the central banks are out of dry powder because they are at the zero  bound or close in the greater part of world GDP, while the lagged impact of the bloated industrial investment boom continues to pour into the supply-side.

Needless to say, the emerging worldwide liquidation of the energy bubble will hit the highest cost provinces first—-which is to say, the shale patch and oils sands of North America. When drilling rigs start being demobilized by the hundreds rather than just by the score—-and its only a matter of weeks and months—the present the US mining production index shown above will bend back toward the flat-line just as housing and real estate construction did last time around.

Stated differently, there is no “escape velocity” in the forward outlook—– notwithstanding the delusional expectations unloaded again this afternoon by Yellen and her merry band of money printers. Much of what meager production and job growth there has been in recent years will soon be taken back as the energy bubble comes back to earth.

Needless to say, the Keynesian pettifoggers at the Fed and the other central banks around the world see none of this coming. So once again in its post-meeting statement, the Fed majority could not bring itself to let go of ZIRP, choosing to assert that it will remain “patient” as far as the eye can see—– while presiding over a meaningless policy change which might be called  N-ZIRP. That is, almost free money, and just as destructructive.

Needless to say, the promise of almost free money for the carry trades is all the Wall Street speculators needed to hear. Within a minute or two, the robo-traders and gamblers managed to put a half-trillion dollars of fairy-tale money back on the screen.

But here’s the thing. The meaning of the oil crash is that the central bank fueled bubble of this century is over and done. We are now entering an age of global cooling, drastic industrial deflation,  serial bubble blow-ups and faltering corporate profits.

So if some headline grabbing algos want to hyper-ventilate because the clueless money printers in the Eccles Building have now emitted the word “patient”, so be it. But why would you pay 20X for bubble bloated profits which have already peaked, and which will be subject to fierce global headwinds as far as the eye can see?

Indeed, the Fed’s lunatic assurance this afternoon that the Wall Street casino will have had free money for 76 months running, and that it will remain quasi-free long thereafter only means that the current financial bubbles in virtually every class of “risk assets” will become even more artificial, unstable and incendiary.

In any event, it ought to be evident by now that “potential GDP” is a fairy tale and that N-ZIRP has no more chance of generating that magic ether called “aggregate demand” than did ZIRP. We are at “peak debt” in nearly every precinct of the world economy, and that means that central banks cannot close this wholly theoretical and imaginary gap; they can only blow dangerous bubbles trying.

What counts is production of real goods and services based on honest prices and the efficient utilization of labor and capital resources. And it  goes without saying that cannot happen under the current  central banking regime of false prices and drastic misallocation of economic resources.

The current illusion of recovery is a result mainly of windfalls to the financial asset owning upper strata, the explosion of transfer payments funded with borrowed public money and another supply-side bubble—-this time in the energy sector and its suppliers and infrastructure.

But that’s not real growth or wealth. Indeed, the faltering truth about the latter is better revealed by the fact that the American economy is not even maintaining its 20th century level of breadwinner jobs. And the real state of affairs is further testified to by the lamentable trend in real median household incomes. That figure—-not distorted by the bubble at the top of the income ladder——is still lower than it was two decades ago.

So much for the Keynesian rap. Yet that’s about all that underpins the latest Wall Street rip.

Breadwinner Economy - Click to enlarge