Tag: Depression

Ep. 540 – Yield Curve Control Coming?
The Kapital News
The Kapital News
Ep. 540 - Yield Curve Control Coming?
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With yields moving noticeably higher on the US 10 year note and 30 year bond, we can be certain that this is gaining the attention of central bankers, the Treasury Department, and investors. While some will and do argue that this increase in yields is a sign of future growth expectations, The Kapital News believes that the bulk of the increase is due to inflationary expectations. Utilizing the printing press as the cure for everything will only get an economy so far. You can print money, but you cannot print jobs, and you cannot print production. Given these yield increases and the volume of speeches, interviews, and conferences of Federal Reserve and Treasury Department officials, signals to us that they know they are running out of ammunition and runway. This is why we continue to hear the aggressive lobbying to pass the $1.9 trillion in additional spending. Such fiscal policy, financed via monetary policy will buy some more time – at least that is the hope. If yields continue their ascent, this may very well be the point of no-return and where the markets are saying enough is enough. All systems have a breaking point. There is only so much a person can drink and eat, or how far he can run before exhaustion. The same holds true for an economy or any system – there are limits. The global economic experiment of QE has been going on for over a decade and is likely nearing its limits, if it has not already hit such constraints. And understand that it will likely take a smaller yield to prick the markets’ bubble due to the fragility of the system.

What is left, is for policymakers to continue onward with their narrative. And this story can and will change with the wind if that is what is needed to calm the markets. So as yields continue their climb, it would not be surprising to hear a lot more Fed officials and others discussing the possibility of yield curve control. The yield curve is simply the graphical plot of Treasuries of differing maturities and connecting those dots, thus drawing a curve. The attempt to control it, is already something that the Fed and other central banks do. However, they do not openly say that is what they are doing. So if they come out and announce such a policy, then this allows for their narrative to stay alive for a little longer until it is on to something else. Despite how powerful central banks and governments are, they are not bigger nor more powerful than the markets. When the markets no longer buy these narratives, then it is look out below because there will be no policy measure to combat the coming correction. Policymakers are running out of time and they know it. It is now all about the narrative and keeping hope alive and hope is not a good strategy. Stay diversified, stay vigilant, and stay with The Kapital News. #Economy #Fraud #Debt #Inflation #Gold #Silver #Commodities #USA #Liberty #Recession #Depression #Bailouts #FireCongress #EndTheFed #bananarepublic #Leadership

Ep. 539 – Jobless Claims Keep Rising
The Kapital News
The Kapital News
Ep. 539 - Jobless Claims Keep Rising
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The markets were expecting initial jobless claims to come in around 773,000 for the week ending 13 February. However, reality bites as the Department of Labor reported a figure of 861,000 on a seasonally adjusted basis. To add insult to injury, last week’s figure was revised upward by 55,000 taking the total from 793,000 to 848,000. We are nearing the one year anniversary of pandemic lockdowns and restrictions and these figures remain well above the claims that were recorded during the depths of the GFC. This is a travesty. With respect to all unemployment insurance programs, some 18.3 million Americans continue to claim some form of benefit. This gives us a de facto unemployment rate near 13 percent. The official unemployment rate is at 6.3 percent. As we near the mid-point of Q1, we should be mindful that benefit and moratorium extensions are set to expire at the end of March. If Congress does not pass further measures, then serious ramifications will transpire. If further spending is passed, then serious ramifications will transpire. The Kapital News does not want Congress and/or the Federal Reserve to spend, borrow, or print more money and throw it into the system. There is no easy solution. But continuing with the same policies that brought us to this current environment is only asking for trouble.

The Federal Reserve’s balance sheet expanded by more than $100 billion week-over-week and now sits at an all-time high at $7.55 trillion. The Fed has stated on numerous occasions that they remain ready to continue to support the economy and markets for as long as necessary. The Fed remains committed to their quantitative easing (QE), program whereby they will expand their balance sheet by $120 billion per month. They will do so by purchasing US Treasuries and mortgage-backed securities. This alone will take the balance sheet to around $8.5 trillion. If Congress should pass more spending measures, then this figure could very well surpass $10 trillion by the end of 2021. For context, this will be about 50 percent of US GDP! Can you say banana republic? Stay diversified, stay vigilant, and stay with The Kapital News. #Economy #Inflation #Jobs #Gold #Silver #Commodities #USA #Liberty #Recession #Depression #Leadership #bananarepublic #EndTheFed #Revolution #Bailouts #Fraud #Pandemic #FireCongress

Ep. 535 – Weekly Wrap Up
The Kapital News
The Kapital News
Ep. 535 - Weekly Wrap Up
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A busy week with the second impeachment trial of former President, Donald J. Trump, announcements made by the Treasury Department and Federal Reserve in support of further fiscal measures that amount to trillions in additional spending, initial jobless claims that remain stubbornly high even as we near the one year anniversary of lockdowns and restrictions, and monetary measures hitting or nearing all-time highs. Also learned from the Congressional Budget Office that this fiscal year will incur a budget deficit of $2.3 trillion, and this is without any additional spending measures. The CBO also projected that 1.4 million jobs will be lost if the minimum wage is increased to $15 per hour. And lastly, another $14 billion may be making its way to the airline industry if the $1.9 trillion spending bill is passed. This will serve as yet another bailout to the airline industry that has already received tens of billions of dollars throughout 2020. Happy Valentine’s Day! Stay diversified, stay vigilant, and stay with The Kapital News. #Economy #Jobs #Markets #Debt #Inflation #USA #Gold #Silver #Liberty #Bailouts #EndTheFed #Recession #Depression #bananarepublic #Protests

Ep. 534 – Economic Match Made In Hell
The Kapital News
The Kapital News
Ep. 534 - Economic Match Made In Hell
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It is highly evident that the sunlight between the Treasury Department and the Federal Reserve no longer exists. The merger has been underway for years and is nearing its completion. Talk about the United States turning into a banana republic, well here it is. If you thought last year was a wild ride with respect to fiscal and monetary support, buckle up, because you ain’t seen anything yet. We know that Congress (Democrats), the Treasury Secretary, and Fed Chairman, are all hand-in-hand when it comes to the $1.9 trillion spending bill proposed by the Democrats and Biden administration. The argument is all about returning to full employment and how the passage of this bill will help to secure that goal. Furthermore, the Fed is completely behind it and willing to finance the deal (because we do not have the money), also arguing that full employment is their goal as well and how the Fed will remain accommodative until that end is met. Recall that one of the mandates of the Fed is to achieve and maintain full employment. The other is to achieve and maintain price stability.

This is just the opening salvo for what is going to be fiscal and monetary authorities gone wild. The $1.9 trillion is more about transfer payments, unemployment benefits, assistance to state finances, Covid-19 programs, and perhaps increasing the minimum wage to $15 per hour than anything else. This means that the Democrats will likely continue onward with the spending spree and attempt to tackle healthcare, the environment, and infrastructure. Some of these measures will likely pass and the cost is unknown, but it will be in the hundreds of billions, if not trillions in aggregate by the time the dust settles. The Congressional Budget Office is already predicting a national deficit north of $2 trillion for this fiscal year alone and this figure does not take into consideration any of the above spending measures.

Speaking of jobs, for the week ending 6 February, 793,000 Americans filed an initial jobless claim, which was above market expectations. The prior week’s figure was revised upward by 33,000 to rest at 812,000. For all programs, for the week ending 23 January, 20.4 million Americans continue to receive some form of unemployment insurance. This is a week-over-week increase of nearly 2.6 million. This would give us an unemployment rate closer to 14.3 percent as opposed to the official rate of 6.3 percent. We are nearly one year into the lockdowns and restrictions, and we continue to witness this type of carnage in the jobs market. This is after several trillions of dollars were flushed into the system. So what makes $1.9 trillion so magical if several trillion dollars could not stop the damage?

The Federal Reserve’s balance sheet hit a new all-time high at $7.44 trillion dollars. Some $30 billion above its previous high. With respect to M1 and M2 money stock, both of these measures are near their respective all-time highs, which were hit within the last few weeks. These numbers will continue higher as fiscal and monetary policies continue their expansion. This is by definition inflation and will prove utterly destructive to the financial system, and more importantly to the real economy. Stay diversified, stay vigilant, and stay with The Kapital News. #Economy #Debt #Markets #Fraud #Fake #FireCongress #Liberty #USA #Inflation #Gold #Silver #Jobs #Bailouts #Spending #Recession #Depression #Protests #bananarepublic #EndTheFed

Ep. 532 – No Savings, No Problem?
The Kapital News
The Kapital News
Ep. 532 - No Savings, No Problem?
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The financial situation for many Americans and their families were in dire straits even prior to Covid-19 and all of the subsequent ill-effects. However, we must note that the broader economy was weakening before the pandemic arrived. So, with the reality of restrictions and lockdowns, this has placed further strains on household finances. Although, it must also be noted that in a typical recession or economic downturn, it is common for incomes to decline. Yet, due to the passage of the Nobody CARES Act and other fiscal and monetary measures, incomes in aggregate actually increased. It must be stressed that this was not the result of productive economic measures, but rather due to inflationary policies – printing money and throwing it into the system in various ways. This is not free and it will prove to be extremely expensive. It will come at the cost of suffering the affects of inflation and with it the loss of savings and purchasing power.

In today’s podcast we highlight a survey that was conducted in the late summer of 2020 that focused on savings in the US. This survey can serve as a timely benchmark as it was conducted during the ongoing pandemic restrictions, but also overlaps some of the fiscal and monetary policies that were implemented. We refer you to the link above to read the article that discusses the findings, yet we will mention a few key points. The median savings balance is $3,500 and the average is $26,619 according to the 2,000 survey respondents. The article also notes that 39 percent of Americans do not have enough money saved to cover a $400 emergency. Further, with respect to retirement, nearly 50 percent of families do not have anything saved for retirement. In what is supposed to be the wealthiest and most prosperous nation on Earth, it sure looks more like a tale of two cities.

It is such inequality that has driven us to economic, political, and social decay and decline. This reality exists due to the flawed and fraudulent fiscal and monetary policies that have been enacted for decades and continue to be implemented on an even larger scale. No proactive measures have been taken nor proper reactive measures. Therefore, the net result will be that the system continues onward on its faulty path until exhaustion. This will end in blood and tears around the globe. Stay diversified, stay vigilant, and stay with The Kapital News. #Economy #Jobs #Savings #Markets #Liberty #USA #Gold #Silver #Inflation #Recession #Depression #Recession #Depression #EndTheFed #bananarepublic #FireCongress

Ep. 531 – The Bubble Buys A Bubble
The Kapital News
The Kapital News
Ep. 531 - The Bubble Buys A Bubble
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Elon Musk, CEO of Tesla, announced today that the company purchased $1.5 billion worth of Bitcoin in attempts to diversify their cash position. It was also noted that the company would be open to purchasing gold bullion and gold ETFs. This may be all fine and well as the company is at liberty to invest and diversify as they see fit, however, it is kind of ironic because in the view of The Kapital News, both Tesla and Bitcoin will be known as the posterchildren of this bubble era when the music stops playing. What is concerning, is the fact that Elon Musk announced such measures over social media as well, that caused a frenzy of buying for Bitcoin, which hit an all-time high today above $46,000 per coin. Mr. Musk knows very well that when he says something on any media platform that it will have an impact on markets, especially with respect to this topic. Knowing he has this power has him straddling a very thin line that neighbors market manipulation. The SEC may be well served in looking further into this matter. If the layman had this type of ability to sway markets, the SEC would probably already have him in handcuffs. Talk about little guys versus the big guy…

The Congressional Budget Office, (CBO), came out today with their analysis on the proposed minimum wage hike to $15 per hour, and concluded that while 900k may be lifted out of poverty, 1.4 million job losses will occur. At a time of chronic and structural unemployment and underemployment, the Biden administration and Democrats believe now is the time for such a policy. Are they trying to be stupid? There should not even be a minimum wage. This is to be negotiated between employee and employer based off of experience and responsibilities of the role, and the supply and demand of labor thereof. The government has no business in this transaction, just like they have no business in most other areas across the economy and society. The unfortunate thing in all of this is that the very people who think they will benefit the most from such an increase in the minimum wage, will be the ones most adversely impacted. They will be replaced by touchscreen monitors, robots, and other technologies. They will have their hours reduced so that employers’ operational costs do not balloon. This could have the impact of going from full-time to part-time, which may impact health insurance and/or retirement benefits. Of course, none of this is mentioned by the proponents of such a policy. In their view, it must be better to let the people find out the hard-way, even though the Democrats pretend to be the party that cares for the little guy.

Other items discussed during today’s podcast pertain to the potential executive action to forgive student debt. This may be as high as $50,000 per student. This is a travesty and the President does not have the authority to legislate via fiat, a.k.a Executive Order. Such an act, whether at the executive or legislative level is wrong. It is immoral, unethical, and un-American. What of those people who sacrificed to pay their loans off? What of those people who never went to college, never wanted to attend, and never will? Why should all of these people now bear the costs of paying off these debts of others? The argument is that if such debt is “forgiven,” then the money used for debt payments can now be used to spend into the economy. If this argument were true, then why stop at student debt? What about mortgages, auto loans, credit cards, personal loans, and others? Such forgiveness would add nearly $1.7 trillion to our national debt instantly, which is already nearing the $28 trillion level. Letting everyone else pay for the debts and/or mistakes of others is no way to run a government or society. The moral hazard that this creates will last generations. And who does the government pick and choose as the “winners” of such a policy? Only for those with outstanding debts or also those who will be entering college this year, next year, for how many years forward or otherwise?

And lastly, the second impeachment trial of former President, Donald J. Trump commences tomorrow. This is a constitutional act, period. Whether or not you believe this issue is an impeachable offense is another matter entirely, but the Congress has the authority to do so. Otherwise, there would be a loophole within the constitution that would allow for a President on his last day(s) in office to commit an impeachable offense and suffer no consequence for such action(s). Nonetheless, the trial will resemble another circus – a circus that never seems to leave town. Stay diversified, stay vigilant, and stay with The Kapital News. #Economy #Tesla #Bitcoin #Markets #Fraud #Jobs #USA #Liberty #Bailouts #Bubbles #Recession #Depression #EndTheFed #Debt #Spending #bananarepublic #Inflation #Gold #Silver #FireCongress

Ep. 530 – January 2021 Jobs Report
The Kapital News
The Kapital News
Ep. 530 - January 2021 Jobs Report
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The official unemployment rate in January fell to 6.3 percent after seeing an increase of 49,000 jobs. Unfortunately, however, the main driver for the decrease to the unemployment rate is people leaving the labor force. This is likely the result of the following options: fewer jobs are available and thus people become discouraged, or the government checks are having behavioral effects and people are growing complacent with these funds. The Kapital News believes it is more so a function of job availability and the long-term unemployed. There is chronic and structural unemployment and underemployment throughout the economy. We continue to witness weekly jobless claims north of 700k, which is higher than during the depths of the GFC. Those figures for the GFC were for a few short weeks, around 650k. The 700k and above has been occurring for almost a year now. What is worse, is that politicians, and policymakers continue to call for more spending. If everything was getting better, then there would be no reason for additional fiscal and monetary measures.

Looking deeper into the report, permanent job losers remains around 3.5 million, which has not been seen since 2013, following the effects of the GFC. The labor force participation rate also remains stubbornly low at 61.4 percent. This is a level not seen since 1976 and went as low as 60.2 percent in April of 2020. The latter being a level last witnessed in 1973. Further, with respect to the employment-population ratio, at 57.5 percent, another level that was last seen in 1983 following a back-to-back recession. This figure hit a low of 51.3 percent in April of 2020. These figures addressed herein, in conjunction with the high weekly initial jobless claims data, continue to point to a weak jobs market. Printing presses may be able to print currency, but they cannot print jobs. Throwing trillions of dollars into the system will give the appearance of an economic rebound, but it is a mirage. It is short-lived. And it will ultimately make things much worse as we move ahead. Updates for the December and November jobs reports were revised lower by a combined (-159,000). Stay diversified, stay vigilant, and stay with The Kapital News. #Economy #Jobs #Debt #Markets #Inflation #Gold #Silver #Spending #EndTheFed #USA #Liberty #Revolution #bananarepublic #FireCongress #Recession #Depression #Bailouts

Ep. 529 – Jobs Slide, Market Highs
The Kapital News
The Kapital News
Ep. 529 - Jobs Slide, Market Highs
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While the initial jobless claims figure came in better than expected, 779,000 remains stubbornly high. This is still well north of the 650,000 figure seen during the depths of the GFC. Since the restrictions and lockdowns, we have not seen a weekly jobless claims figure below 700,000 – almost a full year ago. This has been truly destructive and devastating. For the week ending 16 January, 17.8 million Americans continue to claim some form of unemployment insurance.

Despite these dizzying jobless numbers, the stock market’s major indexes all hit new closing highs. This has become par for the course with a deteriorating jobs markets and yet equity markets continue to rally. Just last week, amidst the trading frenzy in a handful of stocks, we also witnessed the worst week for Wall Street since last October. Yet fast forward only one week, and we are at new all-time highs. The equity markets remain well disconnected from the underlying economy. This is a central banker’s world for the time being and liquidity rules the roost. There will come a day of reckoning due to market forces that are greater than all central banks and governments, and when this occurs, it will be truly devastating and historical.

Speaking of liquidity, the Federal Reserve’s balance sheet remains near all-time highs around $7.4 trillion. The Kapital News believes this figure will near or exceed $10 trillion by the end of this year. M1 money stock hit a new all-time high and now stands at $6.9 trillion, representing a week-over-week increase of nearly $150 billion. Perhaps this is the accelerant for the markets moving higher? M2 saw a slight reduction week-over-week, but remains well within all-time highs that were hit last week.

Lastly, government regulators joined forces today to discuss last week’s market mayhem in GameStop Corp, AMC Entertainment, and others to determine its cause and if necessary take action. What these actions will be is for anyone to guess, but it should be understood that the authorities are more likely than not going to implement some sort of action. Treasury Secretary, Janet Yellen, needed to receive a waiver from the Treasury Department’s ethics office, due to the fact that Secretary Yellen received $700,000 from hedge fund Citadel LLC, for a speaking engagement, following her departure from the Federal Reserve. Citadel is front and center with last week’s episode as they are one of the largest customers of online brokerage and trading app, Robinhood. This is the fox running the henhouse and then once the hens go missing, the fox and his buddies conduct the investigation. Our markets are broken and have been for quite awhile and the policy measures underway now and the regulations about to come down the pike, are not the solutions. In fact, they are a major part of the problem. The January jobs report will be released tomorrow morning. Stay diversified, stay vigilant, and stay with The Kapital News. #Economy #Jobs #Markets #Debt #Inflation #Gold #Silver #USA #Liberty #Revolution #bananarepublic #EndTheFed #Recession #Depression #Bailouts #Protests #FireCongress

Ep. 527 – A Central Banker’s World
The Kapital News
The Kapital News
Ep. 527 - A Central Banker's World
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It is a central banker’s world and we are the lucky ones to be living in it (sarcasm). If you find yourself reading an article on a particular central banker or central bank then you will know all too well how these figures and institutions are praised as opposed to scrutinized. You will also notice a trend of these figures gaining more power in politics. Janet Yellen for one, was the former Chair of the Federal Reserve, and is now the Treasury Secretary. And with the collapsing government coalition in Italy, the Italian President is tapping the shoulder of Mario Draghi, the former President of the European Central Bank for assistance. If Mr. Draghi’s efforts are successful in pulling together a coalition, then he may very well find himself as the next Prime Minister of Italy.

Last week we highlighted the meetings at the World Economic Forum and talks of “The Great Reset.” We also highlighted the global economic projections by the IMF. Is it just coincidental that the same people who are invited to the WEF and serve as members on panel discussions and as keynote speakers, are also people in positions of power to move these types of agendas forward? The recent market volatility has of course caught the attention of politicians and regulators alike and we can be all but certain that more laws and regulations will be placed on the markets and the people. Recent market activity and movements on social media platforms were not organic. Rather, these were sinister ploys to achieving an end – and we are going to find out soon what that is. Stay diversified, stay vigilant, and stay with The Kapital News. #Economy #Markets #Liberty #EndTheFed #Revolution #Debt #Inflation #bananarepublic #Gold #Silver #USA #Protests

Ep. 526 – Coup of the Day
The Kapital News
The Kapital News
Ep. 526 - Coup of the Day
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Myanmar, India, and Russia, oh my! To all of those out there who were ecstatic to see 2020 come to and end and to usher in 2021 – be careful what you wish for. This weekend saw protests in Russia, and India, and a military coup take place in Myanmar. The Myanmar military has seized power, and declared a state of emergency that will last at least one year until new elections are held. This is a fluid situation and major countries and the United Nations are condemning the actions of the military. The cause for the coup was none other than allegations of election fraud in Myanmar’s November elections. Doesn’t this story sound familiar?

In India, farmers from across the country marched and drove their tractors to the capital of New Delhi. This is on the back of new legislation whereby farmers believe that their land will be devalued and they will no longer be able to receive higher guaranteed prices for their goods from the government market. Instead, they will have to trade in the open market and fear corporations will hurt them with respect to prices. Despite the recent growth in India, a significant portion of the population still relies on agriculture for their livelihood.

In Russia, for the second consecutive weekend, protesters took to the streets. Some 5,300 protesters were arrested nationwide. While most were released later that day, this shows the scope of these protests and their movement. Much of this stems from anti-corruption protester, Aleksei Navalny, who was poisoned last year and spent weeks in a German hospital. Navalny returned to Russia, despite the attempt on his life. Upon his arrival to Russia, Navalny was arrested and sentenced to 30 days. Protesters are calling for his release. Meanwhile, the Kremlin is calling for strict punishments, most likely to send a message to current and future protesters. At this juncture, strong-handedness may very well serve to increase tensions and prolong the protests.

The geopolitical climate is hot and most financial markets are not factoring in the slightest of wrong moves that could trigger several eruptions worldwide. In a global economy that remains on shaky ground, any political instability will simply add to the uncertainties, cause further supply disruptions, thus contributing to higher costs for goods and services, at a time when millions around the world are unemployed. This scenario in and of itself can likely lead to further political instability as costs rise, wages drop, jobs are lost, and people cannot find recourse in their countries and within their governments they will likely protest and seek change. 2020 was just the appetizer. Will 2021 be the main course, or just another appetizer for what is to come? Stay diversified, stay vigilant, and stay with The Kapital News. #Economy #Protests #Revolution #Markets #Peace #Liberty #USA #Russia #India #Myanmar #Inflation #Gold #Silver #bananarepublic #EndTheFed #FireCongress #Debt #Recession #Depression #Jobs