Tuesday, September 29, 2015

Chris Vermeulen Blog | U.S. Government Is Going To Monitor All Your Financial Transactions Very Soon | Talkmarkets

Chris Vermeulen Blog | U.S. Government Is Going To Monitor All Your Financial Transactions Very Soon | Talkmarkets

Here is another important article warning about the cashless society. I suggest you read all 4 pages or click on the link to make it one page. Privacy issues and the UN and Bill Gates are discussed.

I have also warned the Millennials about this issue, a crucial issue of the day:


And we have a warning from a commenter at the Chris Vermeulen article by "Joe Economy" that I would like to highlight:

This isn't exactly new news, the NSA has been monitoring credit card transactions, phone calls, emails for probably more than a decade following stricter anti terrorism laws after 9/11. What I would like to see is more security and protection for consumers after the huge breaches of security that exposed credit card data on millions of consumers in the past decade including: TJX 2007 94million records, Ebay 2014 145million records, and Target 2013 110million records. Furthermore, how trustworthy is the government? Can we trust their data protection? In June this year...(From CNN) The personal data of an estimated 18 million current, former and prospective federal employees were affected by a cyber breach at the Office of Personnel Management. In June we also saw a slight reversal in the trend of big brother watching us. Congress voted in a new Act called the USA Freedom Act which was the first time since the 1970s that Congress has indicated its intention to restrict the vast powers of intelligence agencies like the NSA, rather than exponentially expand them. I believe this is just a gesture and a nod at those crying foul to intrusions into citizens' personal freedoms. US Government monitoring will I am sure continue to prevail as society moves increasingly further from a cash based economy and relies more on digital and online transactions.

Wednesday, September 23, 2015

The USA Must Save Itself from the Coming Cashless Society

This article first appeared on my blog at Talkmarkets. I urge you to take a serious look at it:


A. Scott Shay and the Cashless Society are discussed:

On CNBC Scott Shay, Chairman of Signature Bank, spoke about the Cashless Society. This isn't news, as the interview took place in 2013, but it is applicable in the face of many calls for the cashless society, that are ongoing from Larry Summers and others.

Others include the influential Scott Sumner, of Bentley University, the Financial Times, that calls cash a "barbarous relic", the British Central Banker, Andy Haldane and economists Kenneth Rogoff and Citi's Willem Buiter who says cash stands in the way of the ELB, the Effective Lower Bound.

Haldane is one of the 100 most influential people in the world, so these folks mean business.

Larry Summers is diabolically logical, as I pointed out. He makes a reasoned argument, perfect sense, but it isn't worth it to mankind to be subjected to the cashless society, where every transaction is tracked and where emergency situations could cause the loss of life.

Imagine coping with no cash in an earthquake, or in a hurricane. Imagine a tsunami or the electricity being shut off. What would happen in a flu pandemic or massive drought, where people would all have to move? One wonders if in their logic and reason if these globalists have completely lost their minds. 

Can you imagine how many more times mobile phones would be used, making driving even more dangerous? The globalists have an answer for that too, driverless cars.  

Human beings are not going to stand for the risk to their families that a cashless society could present. They won't permit it. They will look for ways to escape it or at least find an alternative if needed.

Scott Shay is also opposed to the very real potential human cost of the cashless society and that is certainly a positive hope for the future when bankers are willing to condemn the idea.

He opposes the idea that every transaction can be monitored and that negative interest rates can be forced upon society. Scott made an interesting point that even Bitcoin could fall victim to the totalitarianism of the cashless society and could be monitored.

Shay believes that the totalitarian aspect, complete control of the individual, resulting from a cashless society, would be unprecedented. In other times, totalitarian governments operated through cult of the leader, through brute force, through slavery, through secret police. This cashless totalitarianism would work through electronic slavery and secret police to stop those issuing alternative currencies.  

Scott Shay misspoke regarding Libertarianism and the invisible hand, but I support his basic position about electronic money. His mistake is in equating economic freedom with the invisible hand of self interest. Economic freedom is the ability to have and spend cash.  The idea that Libertarianism has the answer is without merit. They already failed us when deregulation led to the housing bubble of the last decade. They had their chance and failed.

The Libertarians talk about cashless socialism, but really, economic totalitarianism is capitalism as it now exists. It is control by the corporation, specifically the banking corporations, including the Fed private bank as ruled in the Lewis versus USA lawsuit in 1982. The Fed and the central banks are private. The socialism they wish to impose is for profit, and is about private control. It is all about big capital that wants more control. Bankers are capitalists.

Their socialism is not about too much government power, but rather, too little to oppose the bankers! But as Shay has pointed out, not all capitalists agree with the slide into the cashless society

As for Libertarianism, the invisible hand of self interest "pushed" for the deregulation which worked to create the very system of unregulated derivatives and financial firms dominating commodities that now could impose a cashless society.  

This started with Libertarians in the UK, where there was no Glass-Steagall or New Deal regulation of commodities. It was imported to the USA starting with Thatcher's control over Ronald Reagan who signed the Garn-St Germain Depository Act, allowing liar loans as a concept.

B. Certainly a cashless society could be modified:

1. Bill Gates has been misunderstood in his efforts to make mobile banking commonplace in third world nations. Even Gates' idea is not a cashless society, as he has stated in his 2015 letter that there must be establishments created to transfer digital money to cash. However, he has publicly warned that cash can be stolen and is limited as an asset. He can't be fully trusted because of those words.

2. Denmark has legislated the "freedom" for retail businesses, such as restaurants, retailers and gasoline stations to reject cash as a method of payment. So, that could get interesting as those accepting cash should get more business. But the pressure from the government could be significant. Still, retail shops must realize that they will be prisoners to the banking system if they can no longer take cash. Some gasoline stations give a discount for payments in cash. People sell used stuff at garage sales, and they need that cash. They don't want to pay transactions fees on a 50 cent yard sale item! 

Denmark will allow cash at hospitals. This will all play out in 2016 so we will be watching. Sweden is considering going cashless, too. If the systems are implemented it may be necessary to boycott all things Scandinavian.

3. Buiter says the old and poor can get by with 5 dollar denominations. Everyone will move to 5 dollar denominations and walk around with briefcases filled with money. This is why economists go into economics, because lack developing common sense. It didn't occur to Buiter that the little cash allotted for the elderly may not be accepted in many places? How hard does he want to make it for old folks and poor people?

C. Certainly there are alternatives to and pitfalls from implementing a cashless society:

The cashless society could be eliminated by banning sovereign long bonds as collateral in derivatives transactions. Rates would rise for long bonds and demand would fall. Then when interest rates are raised at the short end they would go up in the long end. There are plenty of real commodities that can be used for collateral.

Keynesian economics does not automatically mean the desire for negative interest rates. Many seek stimulus through monetary policy through negative rates, but surely that has not always been the intent. Keynesians have always advocated fiscal stimulus as interest rates approached the lower bound. It worked to some extent in the Great Depression through the programs of FDR.

Libertarians misinterpret Keynes all the time and badmouth FDR, who my parents said was a great man. They lived through the Great Depression, had wages cut and their furniture payment was not cut. They walked because they could not afford gas as young people in the Great Depression. But FDR had more power over the bankers than any government official does in our age and it isn't even close.

And Keynesian economics is not as effective now because of the derivatives world we live in. But fiscal stimulus used by FDR is shunned by politicians controlled by the bankers, because they want only monetary stimulus and apparently a negative rate world.

Again, bonds as collateral have become so widespread and red hot in their demand, that bonds don't act properly to stimulus by the Fed and the Fed has to keep interest rates low to protect the banks as they take the low floating rate in swaps and their borrowers are forced to take the fixed higher rate. So you can't speed up the economy too much with fiscal projects or the Fed will kill the banks like Volcker killed the S&L's when he raised rates. This time the stakes are much higher!

The solution, which would avoid the need for a cashless society, would be to eliminate bonds as collateral and eliminate swaps in the interest rate market, which is the biggest and most useless market for swaps. The economy would be allowed to grow and banks could lend again.

The cashless society can be compromised with a less cash society. But once you start down the slippery slope can you be sure government will know when to stop? People should at least be able to have 6 months emergency funds equal to salary cash. It is too dangerous to squeeze families by allowing less than this. Natural disasters make it necessary that money be available to spend.

The cashless society will slow economic activity and thus will be too risky for the economy. There will be a political party that has as its main platform the reestablishment of cash. If it has money taken from electronically, the Supreme Court will have to rule that the money must be returned. If it doesn't, Americans will see what the cashless society is all about. A significant number of them will boycott buying houses, cars, discretionary items in protest.

The cashless society will put people out on the street in massive numbers. The next major downturn will result in people walking away from their loans, and yet their bank accounts will be held captive by the loan makers. This will result in overdrafts and perhaps tens of thousands people ending up on the street. Cash increased since the downturn of 2008. People went to cash when they could not pay their bills. This will force alternative money to be created.

The cashless society will make people demand punishment for bankers if it fails. It may be necessary for government to eliminate central bankers if the cashless society proves to be destructive to the economy. And if you think that is far fetched, look at these headlines:

Vietnam's Punishment for Corrupt Bankers: Death

22 Chinese People Who Were Handed Death Sentences for White Collar Crime

Bankers Get Death Penalties After 2.6B Scandal 

Iceland and Russia have sentenced bankers to serve jail time for financial fraud. We in America prosecuted no bankers for financial fraud, yet, the next time may be different, especially if the economy goes bust upon implementation of the cashless society. 

The cashless society will introduce new and alternative ways to fool citizens into accepting the new system. Bailins are planned for the next downturn. Since bank runs will be impossible, depositors, who are really creditors to the bank who are last in line for settlement, will be given token ownership in the banks. This will be their reward for having their savings confiscated. Cyprus was just a precursor.

And Bitcoin will be pushed by Libertarians, as if it won't be controlled by government! While there may be less control, it will still be controlled.

Zero Hedge and Bloomberg have taken the lead in articles about this move to ban cash. Zero Hedge makes two very important points: 

First, a cashless society does not solve any real issues regarding bank lending. If people cannot afford to borrow and banks can't afford to lend, banning cash does not change this. I could envision that a person cannot make a payment in a cashless society, and the account will simply cease to exist and the bank will not get its money back, at least right away. The people who build society, labor, will have major obstacles thrown into their way just to survive on a daily basis.

Second, China will not stop issuing cash. And I could see the Yuan being accepted as cash in the USA, or mass immigration to China, Russia and the rest of Asia. People will want to get the hell out or stop having children to spare them entering such a perverse world.

In closing I would just like to let everyone know that Sputnik news, which supports Russia, has spoken out for human rights when it comes to money, while our bankers are contemplating totalitarianism in the West. This is indeed a very sad state of affairs. There is resistance to a cashless society amongst many central bankers, like Yellen and UK central banker, Mark Carney, but are they pushing against a string? Without some serious changes I have mentioned above, they may lack the power to avoid what is starting to look like the inevitable. But that inevitability will result in starvation of many, and distress beyond the imaginable. The cashless society reflects the woeful desperation of more and more central bankers and their economist friends. The course of history in the western world simply must now be reversed.

Tuesday, September 22, 2015

Lloyd Blankfein has cancer - Business Insider

Lloyd Blankfein has cancer - Business Insider

The two most powerful bankers in America have now been stricken with cancer, Blankfein and Jamie Dimon of JP Morgan. Dimon is cured for now. But clearly they are not listening to warnings from the Almighty. And no, they are not doing God's work, although Blankfein once said he was. Their corporations have been convicted of crimes against America or have avoided prosecution for obvious potential crimes Here are just a few examples.

See here:


and here: 


Business Insider didn't even allow a comment section to the article where Blankfein made his bout with cancer public. Business Insider didn't want the standard comments being hurled at this bad man. 

Monday, September 21, 2015

Did Bethany McLean Misspeak When She Wrote About UK Banking And The GSE's?

This article was originally published to my personal blog at Talkmarkets:


Bethany McLean's misstatements about UK banking and our GSE's is troubling. Now, it is possible that she is not aware of the information I have linked to and that she wrote her comments out of lack of knowledge. But she is in a position where she could have known more about the subject. After all, she is the author of 'The Smartest Guys In The Room, is a Reuters/Vanity Fair contributing editor,and has been an editor at large for Fortune Magazine and a contributor to Slate.  She should explain her reason for the misstatements.

It would be great if she would clear all that up for us.

In her recent Linkedin article,  I've written books about Enron and the financial crisis. But Fannie Mae is the scariest of them all, she quotes Bank of England Mervyn King:

“Most countries have socialized health care and a free market for mortgages. You in the United States do exactly the opposite.”
Of course, the UK did not have free markets for mortgages, they had a bubble based on manipulated liar loans just as we did. I wrote about it on Business Insider. I wrote:

The smoking gun is that the liar loans, which were central to the most intense part of the housing bubble, were imported from the UK, not just to the United States, but to PIIGS nations in Europe as well. The liar loans may have been different slightly in make up from country to country. For example in the UK you had to put money down. In the US you could have a no down, interest only, liar loan!

But, it is pretty clear that the financial system the world over was interested in liar loans for one reason. That reason was to get folks to buy investments in risky CDO's that made banks large profits through origination fees. This was all about the banks, thought up by the banks, and encouraged by the banks. The banks had an ulterior motive for this behavior. Main street had no clue. One banker said you just needed to fog a mirror to be eligible for a liar loan in the UK.

The truth is, the UK had been allowing these loans for years, in the early turn of the 21st century, before they were deliberately introduced to America in mid 2003. This was not just the behavior of rogue institutions in the UK. Most of the lenders, the brokers of the shadow banking system, encouraged liar loans. Only there they were called self certified mortgages.

The Royal Bank of Scotland, the biggest lender, by far, in the UK, encouraged the loans. These were not rogue groups.

The manipulation of loans in the UK was no different than the manipulation of toxic loans in the United States.

So, in the Linkedin article, Bethany makes an additional misstatement. She says that the GSE's argued that the big banks wanted to take away their business but that it was just an unproven conspiracy. Considering she wrote this at such a late date, this year, it is hard to justify her continuing to believe this was just a conspiracy. There is just too much evidence to the contrary. Again, her influential position as a best seller makes it important that she clarify her position and give reasons why she still holds onto that erroneous belief.

Clearly, the big banks have wanted to replace the GSE's for some time. And a New York Times article confirms this fact. The article quotes Michael Barr, law professor at the University of Michigan at the time:

“I don’t think that private shareholder-owned entities should issue federal government guarantees., I think that creates the same conflict we had in the past.”

So, that article was published in 2011. I would be interested to know if Bethany McLean actually saw that article or understands that it is not a just a conspiracy the GSE's were talking about. The NY Times has proof that this is clearly the desire of the big banks. 

Now, here is the deal, the private banks, no longer able to fool investors with failed AAA mortgages, want to control the entire securitization process, in place of Fannie and Freddie.There is simply no other conclusion one can take from the New York Times article.

They want the power to issue government guarantees. Private companies issuing government guarantees on loans that they originate? Do they think we are fools? But when you see a timely article and published book by a woman who dismisses this real truth as simply being an unproven conspiracy, you wonder what her motives are and who is backing her or if she is simply misinformed.

Back to the first misinformed claim, about the UK mortgages. She quotes Mervyn King regarding the free market that the UK supposedly has regarding mortgages, she gets that wrong as well! With permission of the Crown Corporation, I can make this known publicly:

3. Help to Buy: mortgage guarantees

Mortgage guarantees helps you buy a home with a deposit of 5% of the purchase price. It’s open to both first-time buyers and home movers for new-build and older homes in the UK with a purchase price up to £600,000.
The guarantee is provided to your mortgage lender by the government - not to you.


To qualify for a mortgage guarantee, the home you want to buy must:
  • have a purchase price of £600,000 or less
  • not be a shared ownership or shared equity purchase
  • not be a second home
  • not be rented out after you buy it
The property doesn’t have to be newly built.
You don’t have to be a first-time buyer and there’s no limit on your level of income. But you can’t use Help to Buy with any other publicly funded mortgage scheme, or an interest-only mortgage.
So much for the free market in UK mortgages. The article says you can only use this mortgage scheme alone, and not with other mortgage schemes. It is a scheme alright, and Bethany McLean seems to want to give the illusion that the mortgage market is a free market in the UK.

Perhaps she would answer whether she thinks having the big banks taking over the GSE business has anything remotely to do with a free market! Indeed, both of her misstatements are deeply intertwined, as private companies in the UK have public power, yet lead bankers like King deny it and pretend only a free market exists in the UK.

You can know this, the big banks, Wells Fargo, JP Morgan, and the other big banks want the GSE business and they want to pose as private organizations creating a free market, sort of like the illusion created by the UK! But they want that ability to guarantee loans from your taxpayer paid funds.

This placing of government power into the hands of the private sector is a form of totalitarianism, where private enterprise controls government in an unwholesome manner. There is massive power in private banks determining government loan guarantees.

We cannot let the big banks guarantee any mortgages they want to, for securitization purposes. While it is likely that they will operate under guidelines that are stricter than in the Great Recession housing bubble, they would still have the power to guarantee bad mortgages if they felt pressed to do so. That could result in a continuing attack on the stability of house prices. The middle class depends upon that stability, but bankers make money on volatility of house prices, as they do on the movements of other commodities. We know that other markets could be manipulated. And we know that housing was manipulated prior to the crash and Great Recession.

In that housing bubble, so many easy money loans were made, that the easy money itself pushed up housing prices, and it was a form of QE. This occurred in the UK and in the USA. Bidding wars brought on by people who had been approved for bigger and bigger loans drove the price of houses up. Even the Wall Street Journal admitted it!

The Journal says that in the current housing market, supply is low, and that is causing a new reason for bidding wars. This is not necessarily a national inflation of prices brought on by very easy money to the unqualified, but inventory now is definitely is pushing prices up in the West and in other places.
So, banks may have more power to control inventory now. They don't need the marginal borrowers anymore. But that does not mean the banks can be trusted to maintain this discipline forever. They have proven their willingness to lend money to anyone with a pulse, when their backs are against the wall.
For that reason, they should not be permitted to make decisions on who gets government guaranteed loans and who don't get those loans.

We Cannot Trust Big Market Rigging Banks to Replace the GSE's

 My article discusses banks replacing the GSE's and was first published on Talkmarkets:


Big banks have been fined for manipulating LIBOR, fined for manipulating the CDS swaps markets, and are accused of rigging treasury markets for government bonds. These same banks have been seeking to replace the GSE's, Fannie and Freddie, and everyone knows that they have lost the trust of the American people. Bethany McLean has said that a decision should come soon on what to do with Fannie and Freddie.

Here are the banks fined for manipulation of the CDS swaps markets:  Bank of America Corp, Barclays Plc, BNP Paribas SA, Citigroup Inc, Credit Suisse Group AG, Deutsche Bank AG, Goldman Sachs Group Inc, HSBC Holdings Plc, JPMorgan Chase & Co , Morgan Stanley, Royal Bank of Scotland Group Plc and UBS AG.

Most of these banks are primary dealers for the Fed, creating markets for treasury bonds and have been accused of rigging the auctions for bonds as well!  I reported on this scam, and Bloomberg reported that interest rates had been pushed up significantly for bonds, as alleged in the lawsuit.

None of these bank should ever be given the power to assign government guarantees for loans because the temptation for manipulation of interest rates is simply too great if this lawsuit is proven and if we are serious about past manipulations. Apparently the folks bringing the lawsuit used the same methods to determine auction fraud as was used in determining the swaps scam, which led to over a billion dollar fine.

The European banks may already have the power to grant government guarantees in Europe. For example, Royal Bank of Scotland has a loan guarantee program for the low deposit loans in the UK. Low deposit means little down or maybe even no money down.

No one is saying that RBS wants to do this here and is only given as an example. But certainly, the US big banks want to be the administers of various loans that they can affix government guarantees to. This is proven fact as reported by the New York Times. 

So, we have big banks involved in CDS manipulation, LIBOR manipulation, possible Bond Auction manipulation and we want them to replace the GSE's? I don't think that is a good idea. How can it possibly be a good idea?

As bad as the GSE's were, they did not originate the bulk of loans that failed. The private sector did. Bethany McLean speaks of most of the mortgages going through Fannie and Freddie for securitization. However, the originations of most of the loans came from Wall Street.

Bethany McLean is a former Goldman Sachs employee. This is the same Goldman Sachs that was called out by the New York Times article mentioned above in seeking part of the GSE business.

Wall Street bears the brunt of blame for the housing bubble. This chart proves it and we can add this to the reasons above that granting the big banks the business now done by the GSE's is just misguided:

Saturday, September 19, 2015

David Hague | Funny Business

David Hague | Funny Business

Lol, satire mixed with very astute observations. "Bankers are channeling their inner Rothschild." Lol.

We totally agree with the bankers, the big ones and central bankers, desire world domination. How they will actually continue to prosecute this domination and extend it will be interesting to watch. It may not be pretty, however.

Here is another example of his writing which is quite entertaining:


Thursday, September 17, 2015

Primary Dealers Rigged Treasury Auctions, Investor Lawsuit Says - Bloomberg Business

Primary Dealers Rigged Treasury Auctions, Investor Lawsuit Says - Bloomberg Business

Turns out I sniffed out a scam before this Bloomberg report. Here was my article on what had to be a scam. Now we know.


I posted this at Patrick.net:

Collusion to drive down bond prices and inflate yields scares people
into selling their bonds. I wrote that the Fed and Dealers do try to
get people to unload their bonds because there is massive demand for

The corruption is absolute, since bonds in Europe are going negative
yield and people wonder why that isn't happening here. This is big

Israel calls Iceland capital's boycott 'pure hatred' - Yahoo News

Israel calls Iceland capital's boycott 'pure hatred' - Yahoo News

I posted this on the comment section of the article:

My natural father was Jewish and I am adopted, but we like Iceland and
we don't like Israel. Israel is not Jewish. It is Zionist. Big
difference. Judaism is a religion. Zionism is a wicked political cabal
and doctrine of world domination.

Everyone Said Treasury Bond Yields Would Go Up After QE Ended.

 This article was first published by me at Talkmarkets:


Before I show why they have been wrong, I am going to cite some celebrated economic pundits who said that the long bonds would go up in yield after QE. After all, they thought they had it right.

And you will be surprised to know that some of them may have wanted you to panic and sell your long bonds. In some cases, it is likely that their financial buddies in high places needed those bonds, desperately. I am not accusing any of the article builders below specifically.

But talk about a bond bubble circulated in media with a lot of force, like ideas do when they are paid for. One wonders if China was listening to the talk before unloading treasuries? That is pure speculation on my part. Or perhaps China was testing the liquidity of the bond market, which worked out just fine.

But it turns out, the little blip of rising long bonds went away. The 10 year is barely above 2 percent and the thirty year is still under 3 percent. And central banks everywhere have backtracked.

So, before I show why the pundits were wrong, here are some of their statements:

1.The Guardian said of course the interest rates for treasury bonds will rise.

2. Harry Dent wrote an article entitled The Beginning of the End: Rising Long Term Rates.

3. USA Today said that there were reasons that the long bond was on the rise. But that didn't last.

Admittedly, one fellow cited by USA Today said that any rise in yields would be cyclical, and rates would stay low for a long time.

4. Bloomberg talked about taper tantrums where interest rate yields accelerate.

5. The Street spoke of reverse taper tantrums where interest rate yields go back down.

6. OMG, FT spoke of a triple taper tantrum. 

FT was convinced of big growth on the way. Certainly, without significantly higher yields on the long bonds, the middle class won't get as many loans for houses, unless we are in bubble territory, and so the big growth would only be limited to the elite.

But that is what happens when you have massive demand for long bonds, even after QE. That is the secret of letting QE end, that bond demand for collateral in derivatives markets is massive. Even if growth was stronger than green shoots, it still would not force long yields up.

Historically, growth would mean people would leave bonds for stocks as prosperity blossomed. But, historically, there did not exist a 700 trillion dollar, give or take a few trillion, derivatives market creating artificial demand for government bonds 24/7!

8. PBS spoke of Krugman versus Rogoff and Reinhart and Stockman, the three boys who cry "wolf" continually by saying interest rates will skyrocket up soon. Krugman is not giving away the semi-secret of derivatives demand, but he is amused and commented that those other guys act like the Japanese, who have been warning and crying wolf for 20 years! 

9. At least Brad Delong cautions against calling the bond market a bubble but then turns around and tells people to shrink their positions! He says, however, that he is not certain bonds will crash in price, causing yields to rise. But just get out to be on the safe side, he says.


There are many other articles and warnings and wolf sightings by pundits that are not posted here. But then here are a few articles that show my point, that bonds are in massive demand. Truth is, if the economy slows down, people pile into treasury bonds like always. But now, if the economy heats up, people pile into treasury bonds and that is different than in the past.

So, here are a few articles highlighting the demand for bonds, and believe me, getting people to understand this reality is harder than going to the dentist!

1. Bloomberg speaks of negative interest rates in the repo markets for German bonds as people are desperate to own them. And Germany, while not booming, is not in recession.

2. Bloomberg was on this early, speaking back in 2013 of the bond buffer, where demand for treasuries as collateral in clearinghouses would slow any rising long interest rates (that could actually help the real economy. spurring real lending.)

Bloomberg quoted Ted Leveroni, who said:

“This is going to be a new, very powerful engine that drives demand for Treasuries, so you have to expect it will impact yields. There are a lot of firms out there -- I know because they’ve told me -- that are concerned about having the available collateral.”

So far, he has been proven right. So, we can see all that fear mongering about higher long rates, even though higher long rates would help the real economy but force the government to spend less or raise taxes, is not panning out. If anything, the derivatives market is like the Beatles' Nowhere Man, who sucks everything up like a giant vacuum cleaner. The vacuum is sucking long bonds up in all nations, at an alarming rate, hurting prospects for growth above slow growth in the real economy.


This state of economic affairs makes the libertarians and gold bugs go apoplectic. But the libertarians wanted deregulation. Mike Shedlock believed regulation would not ever work, but Glass-Steagall worked for decades, and it was passed when the government had more power than the banks. Eric Holder's sorry career was proof positive that bankers gained more power than the government. The government was too weak to stop them.

So now the deregulation has led to a derivatives totalitarianism, where the bonds are prisoners of demand in a market Mises and his modern friends never knew could come into existence, and the libertarians cannot figure out what happened. They got what they wanted, deregulation, only this is not what they really wanted. No one really wanted it except Alan Greenspan and his friends.

This is what happens when you repeal laws like Glass-Steagall. The senate vote was 90 to 8. Yes, it was a bipartisan endorsement of economic oppression and permanent austerity for the average Joe. The globalists are winning as their master plan for bonds has been realized.

Look at the Eurozone, for an example. The powerful nations threaten weaker nations in the block with suspension of banking services if they reject austerity on the citizens. If they are submissive, the powerful nations instruct their investors to buy the bonds of the weaker hands. In the words of Cloris Leachman in High Anxiety: Disturbing!

And, no wonder banks don't want to lend to the average Joe in the housing market. Why take the risk with long rates so low when you don't have to! Austerity becomes written into the stone of economic reality. Oh, I know, banks have loosened up a little, but only because house prices are bubblicious again.

So, while it was not literally "everyone" who said yield on treasury bonds would go up after QE, the ones that did are a vast majority of pundits. There are some big hitters who have warned of that rising tide, and the main stream media embraced it. The public pretty much believes that. But it isn't happening. It can't happen, in my opinion.

Even if interest rates are raised at the short end, the Fed cannot control yields at the long end. Some, like Paul Craig Roberts have said that long bond prices are manipulated, and Roberts has shown other markets are manipulated openly, like the stock market.

But, in his analysis of bonds, there is no mention that I can find of the massive demand for the bonds that now exists. I would feel more comfortable in his analysis if Roberts took into account rising demand for the long bonds. Roberts is libertarian-like in some of his analysis although he was not for deregulation in the first place.

Certainly, libertarians I talk to cannot grasp the new demand for bonds which has changed everything. It doesn't fit their belief system. They are locked into the past, like dinosaurs of economic thought. 


The implications of low rates on the world economy are worth looking into. Here are some articles I wrote that may be useful in a further study:

The Markets Are Shocked, and That Means Economies Are in Jeopardy

The Fed Scares Everyone About Treasuries from Time to Time. Is It a Scam?

Summers and Roubini Talk Negative Interest Rates, Sound Logic but Uncharted Waters

Fed Chicken and Egg Conundrum, Dimon Proves Will Rogers Right, Banks Are Broke

Are Bernanke and Yellen Charlatans Dangling the Carrot of Prosperty?

As a footnote in closing, I would say that the system we are suffering with today could implode. There could be a revolution. There could be nuclear war. There could be sane men who see the damage of derivatives, who could take the long bond out of consideration as collateral. There could be a plague. There could be a culling of the population by futuristic thinkers gaining the upper hand, although I don't think the plans will succeed. Heck, maybe God could put an end to the creation! So, things could change.

While I don't know about God's immediate plans or first strike nuclear war scheming, it is not likely that purely economic factors will change this economic system for a very long time. Gold prices, for example, may stay in the doldrums longer than gold bugs' life spans, in this treasuries-as-the-new-gold twilight zone we are now in. Talk about an ill timed investment strategy! Peter Schiff and the libertarian bugs could all be history before gold makes a big move up.

One would think that with gold used as collateral we would see the driving up of the price, but it has been acting more like a commodity than collateral. Copper is used as collateral in China but there is so much of it that it does not act like collateral in demand, like treasuries act.

Is the gold market manipulated? Some say it is. Recently, gold has begun to be accepted in clearinghouses as collateral. It isn't money, any more than sovereign bonds are money (the bonds back fiat money), but it is collateral. The demand for gold as collateral may cause gold to go up in price, but the gold market is so large other factors could impact any move up.

We know that Japan has the lead in this JapanRUs race that all nations appear to be copying. So, perhaps we could gain a clue as to when or if this financial system implodes by watching Japan. It hasn't imploded yet. And it has been zombified for 20 years and appears to be coping as the Japanese Rogoffs and Stockmans cry silly warnings about government interest rates rising at the long end. 



Wednesday, September 16, 2015

Wednesday: Wages (Or Lack Thereof) Are Killing This Country $SPY Also $WMT

Wednesday: Wages (Or Lack Thereof) Are Killing This Country $SPY Also $WMT

Wages are taking a beating and we have no recovery. The bottom 60 percent of Americans have accumulated only 2.3 percent of the wealth. This cannot continue or the nation will never recover. I don't think they want the nation to recover. 

Steven Isaacson of Brandeis Center Blog Mistakes antiSemitism for anti Zionism

I posted this at the Brandeis Center for Human Rights page on Facebook:

Steven Isaacson wrote on the Brandeis blog: “BDS is by its very nature an anti-Semitic movement.” Here is my response. He refuses to post the truth. I said: "You are lying. Shame on you. BDS is not by its very nature antiSemitic because Judaism is not Israel and Judaism is not Zionism. You aren’t a university, you are a propaganda machine."

Well, it turns out that the Brandeis Center is not connected to Brandeis University, and I apologize to the University! But the essence of my point stands.
and I also posted:

So, some people who are engaged in BDS may be antiSemites and that is evil. But that does not make the concept of boycotting Israel anti Semite. A court in the UK was clear, the Rothschild project, Israel is not the essence of Judaism. You all need to understand this.

Where BDS or any other movement falls into antiSemitism it must stop that behavior! But, so many times, Zionist will attempt to label antiBDS people. When the Brandeis people seek to stop BDS, they should rather be focused on stopping antiSemitism. BDS is a legitimate movement against an apartheid nation.

We have people like Joe Biden correctly attacking Donald Trump for being bigoted. At least I believe he is bigoted as well. But Joe Biden says nothing about Israel and a bigotry far more intense than you see in Donald Trump.

So, stop antiSemitism, yes. But don't use that as an umbrella to seek to stop BDS. BDS is a very legitimate tool for getting an apartheid nation to change. Israel deserves it.

As far as the existence of Israel is concerned, I do not advocate the overthrow of the Israeli government, nor do I advocate nations attacking Israel, but I do wish Israel would simply voluntarily decided to disband on its own. It was a mistake. Zionism was and is a mistake, a false teaching, and a pseudo religion that is mostly political, established by atheists. 

Sunday, September 13, 2015

Are Bernanke and Yellen Fed Charlatans Dangling the Carrot of Prosperity?

 This article was first published on Talkmarkets:


The Fed and its main recent players, Ben Bernanke and Janet Yellen are possibly well meaning, but are they charlatans in a way, dangling the carrot of future prosperity in front of the nation? This will be discussed in more detail later, but the more I read Ben Bernanke, the more I know his bluff needs to be called somehow.

In the age of derivatives, the free market cannot be free. The free market for interest rates assumes that demand for bonds ebbs and flows. It assumes that there are more times when long interest rates are higher than short interest rates. Since inflation is more prevalent than deflation, that assumption used to be important.

In the normal economy, Banks loaned money to the real economy based on long rates being significantly higher than short bonds. This is not something we don't all already know.

But, as I said, with the rise of derivatives, the long rate stays lower than it would otherwise be, and that is wrecking havoc upon the financial system.The yield curve for short maturities to the long bond (30 year) is not now inverted, but certainly, from a historical view the long bond has yielded a better return.

Ben Bernanke penned an interesting article he posted at the Brookings Institute that reveals the true Ben. Bernanke. He says long bonds reflect the current economy, and this is all temporary, and it will pass and normalcy will reassert itself.

However, clearly, there are mass shortages of the long bonds for use as collateral in the financial world. Scarcity of bonds makes the prices go up and yields go down. Why Bernanke did not address that issue in his article is perplexing.

But, Bernanke does not believe that we are in a secular stagnation, opposing a view which has been offered by Larry Summers. Ben has said that secular stagnation won't last more than 10 to 15 years!

Secular stagnation is where there is little or no growth in the economy and Bernanke calls 15 years of that malaise just a temporary blip. Bernanke believes the low growth is a temporary situation. He looks to near full employment as proof that we are past secular stagnation. Of course, workforce participation is at near historic lows, so Bernanke likely does not have the employment picture correct.

We have to look at a few components of many that make up secular stagnation. A few major components are  

1. low and possible negative interest rates,  

2. low inflation and  

3. low consumer demand.

We appear to have all these and they have been with us for some time, making Larry Summers right.

But we know Summers is a "dangerous" thinker, as I wrote recently, who is not afraid of the cashless society and the negative interest rates. We know that increasing demand through negative rates comes with massive risk, so much so that Bernanke dismisses the concept entirely.

As I said, I personally believe that negative interest rates are a reflection of the financial oppression caused by the massive derivatives market. Consumer demand is low due to the fact that banks cannot make enough money at the long end to loan out money to main street. There is no inflation because there is low demand and long rates are low.

Bernanke stands behind a study done by economists criticizing Summers' secular stagnation. They do not believe low interest rates will be around long.

However, I believe that the Federal Reserve must dangle this carrot of future prosperity, while never being able to achieve it due to that huge demand and shortage of treasury bonds. Jim Chanos made it very clear on an interview on CNBC, that China or anyone selling into the deep bond market will not cause the market any problems.

Bernanke and his successor, Janet Yellen, dangle token interest rate raises, while boasting about how we have full employment and prosperity. I don't think most people believe them anymore.

Bernanke ends his Brookings Institute article with the not so reassuring concept that somewhere in the world, prosperity will bail us out! I am serious. Bernanke says capital investment somewhere should overcome lack of capital investment here at home.

I am giddily reassured and am stock full of lightheartedness. Not!

Summers, on the other hand, fears deflation, and believes that negative rates in a deflationary scenario would be necessary. I won't get into the economists' grinding discussions of nominal versus real interest rates, but just know that nominal rates could be negative and the real rate could be less negative or positive in deflation.

But Summers has, in a way, called Bernanke's bluff. I don't for a minute trust Mr Summers to be able to manage a complex deflationary situation, but clearly, most major nations are either experiencing a secular stagnation or are slowing considerably.

Summers says you lower rates and you push money into the economy quickly and decisively. While I say I don't like the idea of negative rates as it could lead to totalitarian economics and a cashless society, Summers is dead on calling the bluff of the Federal Reserve. He may not think he is calling their bluff, but he is.

And he is doing it by expressing a desire for hot money to enter the system from the glut of savings worldwide. It isn't that the US consumer is saving, but the world is saving and we here can spend it. I am no fan of hot money, but it is real money, and under the right circumstances, could be used for something other than real estate speculation. That was the mistake of the last decade, that the hot money went into real estate and the toxic pay option arms and other crazy loans fed the foreign investment frenzy.

And Summers wants taxes from the subsequent economic growth used for rebuilding American infrastructure. It isn't like that isn't needed!

Bernanke can't believe in that infrastructure rebuild, because he knows the economy won't grow much. He wants it that way. Yes, he wants slow growth and Summers is a threat to slow growth.

But the bluff is that Bernanke just can't stand the risk of any rapid growth because he knows the Fed cannot stop it by swiftly raising interest rates anymore. Too many banks have bet on the floating, low interest rate side.

And demand for bonds in that multi hundreds of trillion dollar market has ruined any power the Fed has to stop a red hot economy. When the Fed seeks to slow growth, it buys bonds, but there aren't enough of them anyway. So that is out. The Volcker decision was to raise interest rates to the teens, wiping out the S&L's. The Fed cannot do so now, or the big banks will be thrown into chaos.

So, it appears the Fed will continue the way of Bernanke, dangling carrot in the faces of main street Americans while seeking slow and slower growth all the time. That smacks of fraudulent tendencies in the Fed's thinking because it is a promise that looks to be unattainable. 

It appears these Bernanke/Summers discussions never get to the subject of stopping the overheated bubble economy that Summers wants. Summers wants bubbles, and those are not good, but he dares the Fed to grow us out of secular stagnation without them. 

And, we know that the Fed cannot grow the economy any more than Bernanke can blow out all the candles in his birthday cake! It lacks that huff and puff power needed to move the economy.

Here are a few solid and/or wishful ideas about how to avoid negative rates, avoid bubbles and really grow the economy like in the old, normal times: 

1. Ban the use of the long bond for use in derivatives collateral.

2. Ban most derivatives and futures markets Onions and movies have already been banned from the futures markets. It can be done. That would free the long bond and banks so they would lend to the public.

3. Restore Glass-Steagall, forcing banks out of taking such large positions in the derivatives markets.

4. Establish state banks, that would fund commercial banks, bypassing the need for Wall Street to finance anything in the real economy. Ellen Brown has championed this approach and she is a nice lady.

5. Raise the minimum wage more aggressively and/or give regular people a small stipend to spend.

6. Establish a Lend-Lease Act for peacetime, for our nation. It worked for WW2, and made America into an economic powerhouse.

7. While shying away from Mortgage Backed Securities as collateral, as they led to the Great Recession, find common minerals to use as collateral, as is done in Asia, rather than using credit as collateral.

Without freeing the long bond from its derivatives labors as collateral, though, most of these ideas will be doomed to failure or have less sustainable success. But clearly, we can't continue with the long bond being a prisoner to artificial demand, and with the economy destined to bump along in secular stagnation.

Wednesday, September 9, 2015

Israel Miscalculated Benefits of Regime Change. Europe Is Lost

Israel has miscalculated the benefits of regime change, a central policy of US neocons and Israeli Zionists. The Yinon Zionism of Oded Yinon and other glimpses into Zionist globalist doctrine show that the doctrine is one of displacement of peoples and of occupation and possible banishment of the Palestinians.

The truth is, many Jewish people oppose Zionism, especially the young, who have witnessed horrific crimes against humanity carried on by Israel. The BDS movement is gaining in scope daily.

But the largest miscalculation of Zionism is that Europe is now being inundated with refugees, with Arab refugees. Israel will lose the public opinion battle in Europe, an area with twice the population of the United States. And Israel deserves to lose this public opinion.

Israel and the USA, who are on the wrong side of world opinion, have pushed regime change and even the creation of ISIS. As more American people realize that ISIS is a part of the Zionist plan of a three part Iraq, written into print over 30 years ago, the Zionists are losing Americans daily to their globalist and imperialist cause.

America is not a willing empire builder, but the UK and Israel, bound to the hip through Rothschild support of the Zionist project (Israel), have called for America to be more aggressive. Niall Ferguson, that UK globalist mole who has weaseled his way into American thought, calls for the US to act like an empire building and make war continually. This is a dangerous way forward.

The nation cannot continue to waste resources upon the middle east, which is like a curse upon us for our support of Israel. The nations must serve its own national interest and pay more attention to the health of its people and its consumers, rather than waste resources on a failed idea, Israel.

Tuesday, September 8, 2015

Fed Chicken and Egg Conundrum. Dimon Proves Will Rogers Right. Banks Broke

 This article was first published by me on Talkmarkets: www.talkmarkets.com/content/us-markets/fed-chicken-and-egg-conundrum-dimon-proves-will-rogers-right-banks-broke?post=72815&uid=4798

The chicken and egg debate regarding the Fed-in-a-box theory contemplates which comes first, rising interest rates or selling bonds back into the economy and to banks.

I have discussed that there are too few bonds in the system to act as collateral for deals and derivatives. But it is proving very difficult to sell bonds to the big banks or to "other financial institutions", as the big banks have a really good deal, interest on money in the excess reserves they possess. They get less interest on bonds if they purchase them. The "other financial institutions" may be holding out for a better deal on bonds. They could even be colluding to boycott bonds.

So, the issue of trying to raise interest rates when there is the risk of deflation is a real risk. And deflation is threatening us, as many others have pointed out, from all sides, financially, globally, and technologically. Yet the other financial institutions want to buy bonds more cheaply.

The Fed is fooling itself if it thinks there is not a deflationary pressure on main street. There is. When you consider student loans, payday loans, easy money car loans and new easy mortgages, there is a definite pressure towards deflation. Main street is only deleveraging by walking away from loans and not by paying down many loans.

Main street pays on interest and doesn't spend on the economy, which needs to grow. It is growing a little, but not because of any big wealth effect, only by the borrowing and debt effect.

Raising interest rates in this environment is pretty hard to do. The Fed can bypass the big banks by selling bonds in the repo market to other institutions like hedge funds, but it has to raise rates and lower the price of the bonds in order to promise the hedge funds and small banks that it will buy the bonds back at a higher price.

So, the repo market could freeze up one day, aggravating the cold shoulder the "other institutions" are giving bond buying.

So, in a deflationary situation the Fed seeks to raise rates and lower the value of the bonds in order to get out of the debt trap. Raising rates is supposed to increase inflation and lessen the burdens of government debt and private debt. But the attempt to raise rates is being met with stiff resistance.

The Fed knows it cannot let the economy overheat. It has new tools to fight inflationary pressures, but the old tool of swift interest rate raising is gone as a tool. Too many derivatives depend on the value of the bonds being where they are. Derivatives are a real problem when it comes to the real economy.

The Fed cannot ever let wages rise significantly, and that is exactly what is needed to combat deflationary trends on main street. Demand is low for goods and services. The Fed can't let wages rise, yet cannot afford not to let wages rise.


So, here are some boxes and nonsensical conundrums the Fed is in:

1. The Fed cannot sell badly needed bonds without raising interest rates. It cannot raise interest rates without more demand for the bonds. Yet there is a massive need for bonds as collateral.

2. The Fed needs to expand the money supply to promote growth, but it needs to contract it to help banks profit.

3. Wages need to rise but the Fed no longer has tools to stop the overheating that could result.Wages need to rise but the Fed cannot let wages rise.

4. Raising rates should result in higher long rates, but in reality it doesn't. That is, of course, the Great Conundrum.

5. As Zero Hedge pointed out, the Fed is the market so how can it stop being the market?

6. Big banks profit from higher interest rates, yet Paul Craig Roberts says that low interest rates are needed to keep banks afloat. Will Rogers said that fear to raise rates shows that banks are skating on thin ice!


As an anecdotal story regarding the problem facing the Fed is the story of a relative of mine who has purchased a house slated for tear down in a bubble area. The renter of the house was the real estate agent. She was so tied up in payday loans that she had no liquidity. She has to stay in the house for months, and just pay rent. The commission will help, but it isn't cheap to move in Los
Angeles. Liquidity on mainstreet is already a problem. Can you imagine if rates are raised? The cost of borrowing payday loans would have to go up and the realtor would clearly have to default unless she sells a lot more houses.

A few years back student loan interest rates went through the roof. This is proving to be another massive drag on consumers.

Americans can't buy goods and services if they are servicing crushing debt.

Americans on the main street level need to have more real wealth and not just temporary liquidity. Banks are not much better off if they must be kept alive by low interest rates. I mentioned that fact here.


So, what is going on? I believe that derivatives are at the heart of this problem. They have bonds acting unlike they should act. They have banks acting unlike they should act. They have the Fed acting totally unlike it should act.

And now the ECB does not have enough bonds to buy.  

That leads to the third to last conundrum:

7.  No one wants to give up their bonds, (in the Eurozone), but no one wants to buy them from the Fed (in the US). Something is being rigged here. Something is not right. Banks and "other financial institutions" are forcing the Fed to raise rates even though it may not benefit the banks with a lot of deposits.

Yet Jamie Dimon has said that those pesky depositors will have to be paid more interest, and so banks won't do as well with higher rates as many people think. While the financial system is pretty well divorced from the real economy, it still takes in money from depositors and they are liabilities to the banks. Pesky depositors will want a better return and can move funds with the internet as a help.  

Jamie Dimon just admitted what Will Rogers knew to be true, that banks are weak and broke and can't afford to pay depositors a decent rate in a deflationary atmosphere.

Anyway, getting back to the original premise of the article, the chicken and egg effect, the Fed used to just sell bonds and short term rates went up. But the Fed now has to massively sell the securities in large quantities order to effect interest rates.

That could result in the "other financial institutions" like hedge funds flocking to the bonds and away from stocks, as the article link above reveals. There is a limit on reverse repos as the Fed fears this may happen. 

That leads us to the next to last conundrum:

8. The Fed must abandon the limit on reverse repos, yet it really cannot do so. The method is a new one. Some think it won't work, others think it will, but it still is taking place in a world that is distressed. If mom and pop get into the bond buying act, as I have said before, they will interfere with the financial system's need for treasuries as collateral.

So, this leads us to the final conundrum:

9. The Fed must make bonds ugly to the man on the street while making them pretty to "other institutions". That will require a slight of hand, never seen before in the annals of central banking. If many investors are willing to buy bonds with negative rates, (hoping the rates would become even more negative over time), think what massive unwanted main street demand for treasuries could occur, crowding out the derivatives crowd, if main street can get real interest from their bond investments.

That just seems too good to be true in this deflationary environment. Banks skate on thin Ice and Jamie Dimon revealed it, and that makes the Fed's conundrum a really difficult one.  

Friday, September 4, 2015

Thomas Piketty Does Not Have the Best Solution for Stopping the Offshoring of Wealth

 This article was first published by me on Talkmarkets:


Back in March of 2015, Thomas Piketty, famous economist who calls for a global wealth tax to fix the inequality of income, was interviewed on CNBC. It is clear from the interview, that Piketty wants the global wealth tax to be administered nation by nation, with a sharing of financial information across national lines.

[At the end of this article I will share what the IRS thinks about financial offshoring as a scam and my ideas for a market based solution.]

There is no doubt to me that this global lawmaking is a tempting proposal. Justice is, after all, a key to survival of the human race. But justice is quite flawed in its practice, and  big finance has the power to bend justice and even write into law what it thinks justice is.

So, it is clear that Piketty supports globalization and said so in the interview. He does not want the middle class business owners thinking that globalization is not as good for them as it is for big business, which often pays a lower rate of tax than small business.

But Piketty does not want a world government to enforce the world wealth tax. He specifically said this in the interview. And that is where I believe the economist is being hopeful but naive.

In fact, globalists can take advantage of the weakness of sovereign nationality to put money offshore, hide assets when needed and even write laws making this legal in many instances. But globalists can also take advantage of a global law, administered by nations, and can simply turn around and treat it like they treated Dodd-Frank.

Globalists can say that the wealth law is being poorly administered on a nation by nation basis. They said Dodd-Frank was ineffective and should be scrapped. Ask Jamie Dimon about that. Criticism about Dodd-Frank weakness actually led to a watering down of the law. There will be an outcry from the globalists that the wealth tax is being poorly administered, and calls for a world agency to properly administer it. That is almost a guarantee.

So, as much as I would like to support a law creating a wealth tax worldwide, I think it is a very bad idea because of the unknown and partially understood consequences that could result from that law. Sovereign nations are still important in the world. Empire is created by force, as it was in Rome, and by financial power, as it is in our time.

Without Empire, there may have been no liar loans spread to Spain, the UK and the USA. Without Empire, there would not be a desire to rule the entire world, as stated by the Neocons when they said America was the only remaining superpower.

Empire can be dangerous and can make serious mistakes and commit serious fraud, and so can a world government that seems to consolidate power even further. Piketty's plan would, I fear, lead to that consolidation.

Globalization does borrow from Empire, and the definition of globalization is a worldwide integration and development. The risk of limiting national sovereignty is always there and is sometimes in the news, as we watch the travails of Greece, and of Argentina, and even of Russia.

I know Russia wishes it could be Empire again, but for now its leader is popular because it holds national sovereignty dear. That statement may offend some, and I am not saying Putin is a saint. But national sovereignty is really the way things ought to be. Empire is not how things ought to be, and many religions even agree with my view. Seeing what Empire has done in history makes even secular folks understand that Empire isn't really good.

Now, national sovereignty can be turned on its head by people like Donald Trump. I don't want to be too political in this article, but should mention that national sovereignty that comes with national arrogance is dangerous too. 

But for the most part, national sovereignty is good. That is why Europe is failing, because the nations are not equal. Germany and the northern countries do not want equality. That could be the eventual undoing of the Euro and the Eurozone.

Piketty has formulated his ideas from his experience with France and the UK. And certainly, he has a sense of what is just. But perhaps a better way to solve this problem is to make stiff penalties for those who are caught hiding money out of their sovereign nation's view. The penalties should be very harsh, and act as a deterrent.

As of now, the IRS has a voluntary program of disclosure but I believe it should be backed up by more forceful laws if you are caught. Other nations could follow that lead. Here is the IRS program:

The Internal Revenue Service today said avoiding taxes by hiding money or assets in unreported offshore accounts remains on its annual list of tax scams known as the “Dirty Dozen” for the 2015 filing season.
"The recent string of successful enforcement actions against offshore tax cheats and the financial organizations that help them shows that it’s a bad bet to hide money and income offshore,” said IRS Commissioner John Koskinen. “Taxpayers are best served by coming in voluntarily and getting their taxes and filing requirements in order.”
Since the first Offshore Voluntary Disclosure Program (OVDP) opened in 2009, there have been more than 50,000 disclosures and we have collected more than $7 billion from this initiative alone.  The IRS conducted thousands of offshore-related civil audits that have produced tens of millions of dollars. The IRS has also pursued criminal charges leading to billions of dollars in criminal fines and restitutions.
The IRS remains committed to our priority efforts to stop offshore tax evasion wherever it occurs.  Even though the IRS has faced several years of budget reductions, the IRS continues to pursue cases in all parts of the world, regardless of whether the person hiding money overseas chooses a bank with no offices on U.S. soil.
Through the years, offshore accounts have been used to lure taxpayers into scams and schemes.
Compiled annually, the “Dirty Dozen” lists a variety of common scams that taxpayers may encounter anytime, but many of these schemes peak during filing season as people prepare their returns or hire people to help with their taxes.
Illegal scams can lead to significant penalties and interest and possible criminal prosecution. IRS Criminal Investigation works closely with the Department of Justice (DOJ) to shut down scams and prosecute the criminals behind them.
Hiding Income Offshore
Over the years, numerous individuals have been identified as evading U.S. taxes by hiding income in offshore banks, brokerage accounts or nominee entities and then using debit cards, credit cards or wire transfers to access the funds. Others have employed foreign trusts, employee-leasing schemes, private annuities or insurance plans for the same purpose.
The IRS uses information gained from its investigations to pursue taxpayers with undeclared accounts, as well as the banks and bankers suspected of helping clients hide their assets overseas. The IRS works closely with the Department of Justice (DOJ) to prosecute tax evasion cases.
While there are legitimate reasons for maintaining financial accounts abroad, there are reporting requirements that need to be fulfilled. U.S. taxpayers who maintain such accounts and who do not comply with reporting requirements are breaking the law and risk significant penalties and fines, as well as the possibility of criminal prosecution.

That possibility of criminal prosecution for failure to report should change to probability of criminal prosecution. And the IRS needs to go after the wealthiest hedge funds and others engaged in this fraud. Piketty would certainly approve of this increased reporting requirement.

I also believe that the marketplace should be put to work. If a nation refuses to pass tough international disclosure laws and/or hides offshore money from home nations, that nation should be boycotted in some way. That means it could be necessary to boycott allies.

For example, the UK has corporations actively involved in hiding money. The US is far too lax with that nation as we are shocked by the Guardian's study on the subject.

It isn't just the UK but rather the entire Anglo Financial Empire that needs to be reined in by US lawmakers. At least some markets in the UK should be boycotted by our nation until all this is sorted out.

Perhaps there is a way to reach Piketty's goal without giving up more sovereignty than we and other nations already have. A good old nation to nation negotiation is what is needed. We aren't talking war, just real economic war to get this problem fixed.

Tuesday, September 1, 2015

How HFT Has Killed Market Basics - UrbanSurvival

How HFT Has Killed Market Basics - UrbanSurvival

Just one example in this great article: 

Say you enter an order to buy 100 shares of XYZ.  The trading house
you’re with might buy 1,000 shares for a fraction of a second – just
long enough to drive the price up.  Depending on machine speeds, another
outfit notices the price and buys 1,000 shares, too.  And a third,

By the time your poor order for 100 shares is actually “filled” what
happens?  You pay a fraction of a cent more.  Regulators don’t care
because they view it as “petty crime” but it happens millions of times
per day so it adds up.