TEN YEAR YIELD HITS 10.37, AS FEARS OF RECESSION LOOMS. HIGHEST SINCE 2007. OIL @92 LIGHTS UP INFLATION AND AND UAW STRIKES AGAINST INFLATION.

HOW ON EARTH CAN RECESSION AND INFLATION WORK TOGETHER??

The Coming Collapse Of The Global Ponzi Scheme Tyler Durden's Photo BY TYLER DURDEN MONDAY, SEP 18, 2023 - 12:55 PM Authored by George Ford Smith via The Mises Instititute, It won’t be long before governments around the world, including the one in Washington, self-destruct. Strong words, but anything less would be naïve. As economist Herbert Stein once said, “If something cannot go on forever, it has a tendency to stop.” Case in point: fiat money political regimes. Interventionist economies of the West are in a fatal downward spiral, comparable to that of the Roman Empire in the second century, burdened with unsustainable debt and the antiprosperity policies of governments, especially the Green New Deal. In the global Ponzi scheme, thin air and deceit substitute for sound money. As hedge-fund manager Mitch Feierstein wrote in Planet Ponzi, “You don’t solve a Ponzi scheme; you end it.” Charles Ponzi and Bernie Madoff ...made some of their investors a whole lot poorer, but the world didn’t come crashing down as a result. For that‌—‌for a Ponzi scheme that would threaten to bankrupt capitalism across the entire Western world‌—‌you need people much smarter than Ponzi or Madoff. You need time, you need energy, you need motivation. In a word, you need Wall Street. But Wall Street alone doesn’t have the strength to deliver a truly cataclysmic outcome. If your ambition is to create havoc on the largest possible scale, you need access to a balance sheet running into the tens of trillions. You need power. You need prestige. You need a remarkable willingness to deceive. In a word, you need Washington. As Gary North wrote in a brief review of Feierstein’s book, “The central banks have colluded with the national governments in order to fund huge increases of national debt, beyond what can ever be paid off. In other words, [Feierstein] has described government promises as part of a gigantic international Ponzi scheme.” In a recent interview, Peter Schiff, who was laughed at when he predicted the economic meltdown of 2007–9, said interest on the federal debt alone “will be about a trillion by the end of this year. By the end of next year [it will reach] two trillion dollars—and that’s if interest rates don’t go up. . . . This is a huge debt bomb that’s going to explode.” Ultra-high corporate and credit card debt, along with bank insolvency sustains his argument for a coming collapse, the polar opposite of Biden’s economic dream. Along with this, Reuters notes that the spread between two- and ten-year Treasuries is at the deepest inversion since 1981. Rarely has an inverted yield curve not signaled a recession. Can Jerome Powell and his advisors steer the economy into a soft landing? Not this time. “The only landing possible is a crash, where everyone on board dies,” Schiff recently tweeted. Ponzi and Madoff went to jail for their schemes, but how do you prosecute governments for theirs? Prosecution implies being a part of government. And with rare exceptions such as Ron Paul, those who go into government believe gold is a barbarous relic and the Fed is a good thing that just needs a little government tinkering. So, the guilty will go unpunished, unless public outrage misguidedly turns to nonjudicial violence. The rest will be too busy trying to survive and protect those they care about. The War on Being Human A study of history, including US monetary history, makes clear that the state is not in the business of securing our liberty. As the previous nine hundred plus days have made clear, any defense of “liberty” would likely be regarded as hate speech. Instead, we are inundated with the feel-good words of diversity, equity, and inclusion along with the fear-driven campaigns of climate change and killer covid. Challenge any of it and you’re demonized—or worse. But the state can’t do anything significant without monopolizing money, and the Orwellian central bank digital currencies (CBDCs) will be the latest installment to control the monetary system. The new FedNow payment system with its emphasis on user convenience is providing the framework and psychological grooming for CBDCs. The Shadow Superpower We can stop this from happening. Two states, Florida and Indiana, have effectively banned CBDCs as money in those states. Other states will likely follow. The government will outlaw cash at some point, but those who use it now are casting a vote against CBDCs. Many people will turn to barter, some using barter metals, and to the shadow economy. If this sounds desperate, consider how the global black market in 2011 was the world’s fastest-growing economy. Sometimes referred to as System D, it features both the usual, small transactions of flea market trades or workers looking for employment in the parking lots of home improvement stores and also larger, international trades. David Obi, a Nigerian, relying on his cell phone and his own initiative, contacted a Chinese firm to have small diesel-powered generators shipped to his home country, where electric power is often scarce: “Like almost all the transactions between Nigerian traders and Chinese manufacturers, it was also sub rosa: under the radar, outside of the view or control of government, part of the unheralded alternative economic universe of System D.” Friedrich Schneider, research fellow at Johannes Kepler University Linz, Austria, whose expertise is in off-government economies and who coauthored The Shadow Economy, found that System D is growing faster in many countries than the officially recognized gross domestic product. If System D were an independent nation, it would be the second-largest economy in the world. Conclusion The future is undecided, but we can help determine the outcome if we take responsibility for it. Wikipedia defines System D as “a manner of responding to challenges that require one to have the ability to think quickly, to adapt, and to improvise when getting a job done.” In this sense success has always depended on System D, with or without government. The American term for it is life hack, “any trick, shortcut, skill, or novelty method that increases productivity and efficiency, in all walks of life.” Whatever you call it, it describes a spirit all of humanity needs to adopt if we are to survive the coming collapse of government Ponzi schemes.

THE US, NATO COUNTRIES AND CHINA ARE IN THE SAME BOAT AS JAPAN. Budget deficits, treasury bonds, Fed C.Banks buy backs, QE, leads to inflation. Rate hikes to counter inflation in a bubbled economy is having no effect.

Japanese Panic Buy Gold As Yen Implodes And Inflation Soars Tyler Durden's Photo BY TYLER DURDEN THURSDAY, SEP 14, 2023 - 06:20 PM A gold-buying frenzy in hyperinflating banana-republic basket cases such as Venezuela, Zimbabwe, Argentina or Turkey makes sense; one can also imagine Indians and Chinese liquidating rushing to buy the precious metal, as they periodically do (for other, not less relevant, reasons). But Japan? That's right: the otherwise quiet (and rapidly aging) population of Japan has found a new infatuation with gold, and it has the relentless money-printing juggernaut that is the BOJ to thank for it. Japanese savers have not had a strong incentive to move assets out of cash... until now As the FT reports, the price of gold in Japan (denominated in that joke of a currency, the Japanese lira yen) has jumped to an all-time high as the yen extends its historic slide against the US dollar, vaporizing the purchasing power of residents and forcing cash-rich households to find a hedge against ubiquitous inflation. Buying of yen-denominated gold at the nation’s largest dealer has driven the price of the yellow metal above the ¥10,000 per gramme level for the first time in recent days. It was trading at ¥10,100 last week, according to retail prices published by Tanaka Kikinzoku, one of Japan’s largest gold retailers. The retail gold price in Japan — the main reference price for the metal in the country — tracks global spot prices, which have been pushed up by the coronavirus pandemic, the war in Ukraine, the debt ceiling crisis in the US and global tensions between the east and west. But most of all, it reflects the dramatic collapse in the value of the yen, which recently passed ¥147 against the dollar, a level that last year triggered verbal market intervention by the Japanese authorities but this year has been widely ignored by a central bank which realizes that intervention at this point is futile and would only precipitate Japanese hyperinflation and systemic collapse. And since Japan's inflation, which recently surpassed that of the US, will keep rising... ... as the weak yen will only get weaker - occasional desperation intervention aside - as long as there was no signal from the Bank of Japan that it is ready to tighten its ultra-loose policy which won't happen for a long time (and when it does, it will spark a collapse in the JGB bond market forcing the trapped BOJ to immediately reverse once again) demand for gold in Japan will only keep rising. Economists cited by the FT, said the move in retail gold prices, which extends an 18-month rally at gold stores around Japan, was part of a rapid shift in household attitudes to risk as years of deflation have given way to rising consumer prices. Imagine a world where the biggest source of demand for gold in Asia is not India but Japan, and where demand will only rise as the yen (inevitably) falls as it gets closer to its inevitable and catastrophic end. Well, we are pretty much there now. Jesper Koll, an economist and adviser to the Japan Catalyst Fund, an investment fund, said the primary driver for the buying by Japanese households was an urgent search for inflation protection after years without strong incentive to move assets out of cash. “The fact that gold is a non-yen asset helps, but the trigger is inflation,” said Koll, and since inflation in Japan is only going to rise, so will demand for gold. Japanese households emerged from the pandemic with a record of more than ¥2 quadrillion in accumulated assets or around four times the country’s annual gross domestic product. About half of that was held in cash and deposits — a balance closely eyed by Japan’s securities houses, which are trying to convince customers that inflation is here to stay and they now need to switch their savings into other financial products. The problem is that core CPI in Japan reached 3.1% last month. “Inflation in Japan is at a crossroads,” said Tomohiro Ota, senior Japan economist at Goldman Sachs, noting that although consumer prices keep going up, some of the increase is down to temporary government subsidies while consumption growth has stalled since March. Goldman Sachs predicts that Japan’s currency will hit ¥155 against the dollar in the next six months. Eiichiro Kato, a general manager for Tanaka Kikinzoku’s Precious Metals Retail Department, said that gold had become particularly attractive to customers concerned about the yen’s fall to multi-decade lows and their assets being denominated in yen. Of course, it's not just Japanese savers who are rushing to the safety of gold: a year of record gold purchases by central banks in a world where the dollar is now weaponized against enemies of Ukraine the Biden administration, has made it clear that demand for gold will only rise. "We do not see many factors that would cause the dollar-denominated price to fall significantly, and we think that the yen-denominated price could rise further if the yen continues to weaken,” said Kato. However, Hideo Kumano, chief economist at Dai-Ichi Research Institute, warned against reading too much into the rise in Japan’s gold price due to the small size of the market. “It could prove to be an outlier and the country’s elderly population might not change their behaviour and start to consume, even if inflation does remain high,” he said. On the other hand, with deflation now dead and buried (at least until the next global depression) the odds that Japan's notoriously thrifty population will continue to save at a time when its currency is collapsing are nil, especially since the BOJ itself has given up trying to contain the surge in yen-denominated gold... ... something it did for much of the previous decade.