• Thanks to Credit, Who Cares About Debt?

    27.04.2018 • FranceComments Off on Thanks to Credit, Who Cares About Debt?

    Simone Wapler – La Chronique Agora (France) –

    Creditism feeds the zombies but leaves the taxpayers bloodless.

    A reader reacted to my column ”  Everybody does not care about debt because everyone lives on credit  “:

    ”  I read you with great interest, and having worked in the bank for 30 years, I understand your analysis. As banker of the older generation, I often referred to the principles of my elders, who bought a refrigerator when the money, after months of savings, was finally spared in the iron box of biscuits Belin.

    However, you exaggerate on credit (my automatic corrector tries to impose me cretinism!).

    In fact, to renovate and expand my house, I had recourse to a credit, which actually constituted the deposits at the artisans I used.

    But the reimbursement that I bear is only the counterpart of a rent that I should have paid if no financing had been possible. In the same way, (this is not my case) but if I repay a car loan, it may save me to spend the next months on expensive public transport (in the province is often the case when said transport exist).

    You see we are far from zombies.

    Alas and I fully agree on this aspect, zombies absorb credit.

    Today personal and real estate loans are no longer the appeal products of retail banks, which prefer to market services (telephony, insurance, security, etc.). ” 

    This is an important point raised by this reader. Indeed, credit is not bad in itself.

    In these two examples, rent is saved and the car is often a “working tool” for a biped away from his employer or his company.

    It is not the borrower who is involved. The loan is an institution more than 3,000 years old. It is the fact that the money lent does not exist that makes the credit.

    Just leave your email and download Jim Rickards's book

    Banks do not lend only deposits that customers mistakenly believe is “their money”. I mean deposits and not remunerated savings accounts.

    Banks lend in the limit of one to 20 or 30 (one being their own funds). They can even lend endlessly to the States since the sovereign securities do not require immobilization of own funds according to the legislation in force.

    If the big banks have difficulties because they have imprudently lent, the States, that is to say the taxpayers, steal to their rescue. This is possible because they have hostage deposits.

    In these conditions, without sanction by bankruptcy, no need to be looking at the quality of the lender.

    Conversely, when the state begs a loan, how can it be denied to the same state that has granted the banking license?

    That’s right, crediting (and finally, the spell checker that offers “cretinism” is not that stupid …)

    It is this principle that lends money that does not yet exist, that the debt can grow without limits since the sanction of bankruptcy no longer exists and that the rates of bankruptcy are artificially lowered. interest to make believe that the public debt endorsed by the taxpayer is bearable.

    Creditism has nothing to do with capitalism – which works with savings, lends money that already exists and is being bankrupted to eliminate bad projects and favor good ones.

    Credit, it does not build the future, it destroys it.

    -Read more at la-chronique-agora.com (French)-

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  • Maybe We Don’t Have to Work, After All

    27.04.2018 • United StatesComments Off on Maybe We Don’t Have to Work, After All

    Bill Bonner – Bill Bonner’s Diary (United States) –

    εἴ τις οὐ θ έλει ἐργάζεσθαι μηδὲ ἐσθι έτω
    eí tis ou thélei ergázesthai mēdè esthiétō
    (He who does not work, neither shall he eat.)

    – Attributed to St. Paul

    BARCELONA – Errata: This will come as a shock to many Dear Readers, but occasionally, we make errors here at the Diary.

    Most of them don’t make much difference… but let’s correct one of them.

    Obviously, our date for the end of the Peloponnesian War that we mentioned yesterday was just a dumb mistake. It was 404 BC, not 404 AD.

    But let’s put our past errors behind us… and move on to new ones!

    Money Without Strings

    Yesterday came news that Finland has given up.

    The idea – which was “experimental” – was to give people money without conditions attached. If you were jobless, for whatever reason, the program entitled you to $685 a month.

    Not much. But it came with no strings attached. Free money, in other words.

    No need to look for a job. No need to be retrained. No need to do anything.

    “He who does not work, neither shall he eat,” wrote Paul to the Thessalonians.

    It was an old idea, another of the precious insights, condensed and hardened – like diamonds – by time and experience. It takes work to produce food. A society that doesn’t work will soon go hungry.

    But since it now takes fewer and fewer people to produce the food we eat, many people have come to the conclusion that this gem of wisdom has been rendered obsolete by technology. Maybe we don’t all have to work, after all.

    So it was that Finland provided a “basic income” to those in need. Similar experiments are underway in San Francisco, Toronto, Kenya, and the Netherlands.

    And now, after only a few months, Finland has given its judgment; it has dropped the program.

    The New York Times, however, was quick to explain that this was not a verdict against a “basic income:”

    In much of the world, the concept of basic income retains appeal as a potential way to more justly spread the bounty of global capitalism while cushioning workers against the threat of robots and artificial intelligence taking their jobs…

    The Finns’ decision, said The New York Times, was merely a recognition that the country already has plenty of programs for poor people.

    Healthcare is free. University education is free. Unemployed people get benefits (though they have to look for a job in order to receive them). Another program seemed redundant.

    Attractive Lunatic

    We began the week by describing how tradition – often expressed in aphorisms, adages, and proverbs – distills the lessons of centuries. The idea took shape as we visited the Sagrada Família cathedral here in Barcelona.

    The building rejects traditional architecture in favor of bold new shapes and imaginative designs.

    The Sagrada Família is breathtaking… and exhilarating, like meeting an attractive lunatic. But our guess is that it is an evolutionary dead end.

    Language, art, architecture, manners, economics, and morals – all evolved with human beings themselves. Those innovations that helped us survive and prosper endured. Those that did not were discarded.

    Why do men and women still marry each other? No law requires it. No invented it. There is no proof that it is better than any other domestic arrangement. And many people who have tried it complain about it.

    But most people give it a shot anyway, often more than once.

    Of course, many people think they can dispense with the formality of it.

    “We’re not married,” said a young friend recently. “We just live together. It’s got to work for us both. And when it doesn’t work, well, we don’t want to be stuck with one another.”

    “Well,” we replied, speaking from much experience, “it doesn’t work every day!”

    Courting Disaster

    People often chafe against the rules and restraints of tradition. Why should they be bound by old wives’ tales and silly old conventions, they wonder?

    Aren’t they smart enough to figure things out for themselves, they ask?

    In a word: No.

    Turn your back on tradition and you court disaster. At least, that is the idea on the table. And yesterday, we looked at how rejecting the old wisdom – live by the sword, die by the sword – is a dangerous way to conduct foreign policy.

    “Put your sword back in its place,” said Jesus.

    Instead, the U.S. is swinging its big Claymore all over the Middle East and Africa. Our guess is that this will pay off – but only for people who make swords! Everyone else will lose.

    People don’t get what they want. They don’t get what they expect. But the gods make sure that, sooner or later, they generally get what they deserve.

    Regards,

    signature

    Bill

    Economic Insight: How to Save the Prairie State

    By Nick Giambruno, Editor, Crisis Investing

    The state of Illinois is in trouble, and it’s only getting worse…

    Bill has already reported on this topic. But for readers who don’t know, Illinois is currently facing a fiscal crisis of epic proportions.

    For starters, the state’s budget deficit continues to widen. Have a look at the chart below.

    Chart

    In 2016, Illinois had a budget deficit of about $9.6 billion. But just one year later, in 2017, that figure jumped to $14.6 billion. That’s a 52% spike.

    Here’s why that’s a problem…

    Illinois is currently grappling with a pension crisis. Credit rating agency Moody’s estimates that the state has $251 billion in pension debt. Combine that with the fact that the state government has struggled to match tax income with outlays for years and you have the makings of a real crisis.

    The situation is so dire, in fact, that Moody’s actually downgraded the state’s debt to a “Baa3” early last year. That simply means that Illinois is one step above “junk” status.

    Now, there are a few things Illinois could do.

    It could raise taxes. Illinois actually did this already. It raised the income tax rate from 3.75% to 4.95% in July of 2017. And the tax software company Turbo Tax estimates that Illinois is already one of the leaders in combined sales and income tax. At 11%, it’s the fourth-highest in the country.

    But raising taxes even further has the potential to backfire. High-wealth individuals could flee the state and seek shelter in lower-tax states like Florida or Texas. That would reduce the tax revenue for the state of Illinois.

    In fact, over 3,000 millionaires have fled Chicago in recent months.

    This is the largest outflow of wealthy people from any U.S. city right now. It’s also one of the largest outflows of wealthy people in the world.

    But it’s not just millionaires… Every five minutes, someone leaves Illinois.

    The second option for Illinois could be to issue more debt. The state already seems to be taking that route. On Wednesday, Illinois put more than $500 million worth of bonds on sale. But with a near-junk rating, it remains to be seen if investors will buy in.

    And more debt merely exacerbates the problem. It kicks the can down the road for another day.

    But there is a third option.

    Illinois could legalize recreational marijuana, tax it, and use the revenue to dig itself out of its financial hole. In fact, that appears to be precisely what it’s doing.

    The Wall Street Journal reported on the developments last month:

    Democrats running in state primaries across the country have been promoting legal marijuana as a painless way to raise money while avoiding tax increases.

    In Illinois, the candidates vying to be the party’s gubernatorial nominee are so invested in the issue, they have been attacking one another for failing to embrace it with enough vigor.

    Readers of my investment service Crisis Investing know that this is a trend I’ve been following for a long time. The unfunded pension liabilities in Illinois are disastrous for the state’s budget, but great news for recreational marijuana investors.

    And there are other catalysts…

    California legalized recreational marijuana on January 1 of this year. Canada will legalize marijuana nationwide later this summer.

    And as I reported to you last week, President Trump just gave the green light to the marijuana industry when he abandoned a Justice Department threat to crack down on legal pot.

    This all adds up to one thing: a massive bull market in legal marijuana. And the good news is that you’re not too late. This industry is just getting started.

    – Nick Giambruno

    P.S. Last night, thousands of readers tuned in to the Pot Stock Millionaire Summit. I, along with Doug Casey, showed why many more marijuana millionaires will be minted in the years a.

    Now, there’s certainly risk involved, and you won’t be handed a million bucks overnight. But investing in the legal marijuana explosion is the best way I know to turn a few hundred dollars into $1 million in the years a. Here’s how you do it.

    -Read more at bonnerandpartners.com-

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  • Russia’s Hidden Relationship with Cryptos Revealed

    27.04.2018 • United KingdomComments Off on Russia’s Hidden Relationship with Cryptos Revealed

    Andrew Lockley – Exponential Investor (United Kingdom) –

    Last year I read a book about “the new Russia” called Nothing is True and Everything is Possible.

    It was written by Peter Pomerantsev, a journalist who’d spent a decade producing programmes for Russian state TV.

    Here’s the synopsis:

    In the new Russia, even dictatorship is a reality show. Professional killers with the souls of artists, would-be theater directors turned Kremlin puppet-masters, suicidal supermodels, Hell’s Angels who hallucinate themselves as holy warriors, and oligarch revolutionaries: welcome to the glittering, surreal heart of twenty-first-century Russia. It is a world erupting with new money and new power, changing so fast it breaks all sense of reality, home to a form of dictatorship–far subtler than twentieth-century strains–that is rapidly rising to challenge the West.

    When British producer Peter Pomerantsev plunges into the booming Russian TV industry, he gains access to every nook and corrupt cranny of the country. He is brought to smoky rooms for meetings with propaganda gurus running the nerve-center of the Russian media machine, and visits Siberian mafia-towns and the salons of the international super-rich in London and the US. As the Putin regime becomes more aggressive, Pomerantsev finds himself drawn further into the system.

    Dazzling yet piercingly insightful, Nothing Is True and Everything Is Possible is an unforgettable voyage into a country spinning from decadence into madness.

    Throughout the book you learn about the, frankly, ingenious tactics used by Russia’s spin doctors. Or one spin doctor in particular, Vladislav Surkov.

    Surkov is a master of manipulation and an architect of “the new Russia”. In his own words:

    “My portfolio at the Kremlin and in government has included ideology, media, political parties, religion, modernization, innovation, foreign relations, and … modern art.”

    His trademark method of manipulation is his openness about the fact his is manipulating you. As Pomerantsev describes it in the book:

    The brilliance of this new type of authoritarianism is that instead of simply oppressing opposition, as had been the case with 20th-century strains, it climbs inside all ideologies and movements, exploiting and rendering them absurd. One moment Surkov would fund civic forums and human-rights NGOs, the next he would quietly support nationalist movements that accuse the NGOs of being tools of the West. With a flourish he sponsored lavish arts festivals for the most provocative modern artists in Moscow, then supported Orthodox fundamentalists, dressed all in black and carrying crosses, who in turn attacked the modern-art exhibitions.

    The Kremlin’s idea is to own all forms of political discourse, to not let any independent movements develop outside of its walls. Its Moscow can feel like an oligarchy in the morning and a democracy in the afternoon, a monarchy for dinner and a totalitarian state by bedtime.

    After reading the book, you can see how Russia’s political manipulators manage to run rings around those in the West.

    If our government wants to get something controversial and authoritarian through, all it does to get the press on side is trot out the “paedophiles and terrorists” line.

    “This [whatever they want more control over] is helping paedophiles and terrorists. That’s why we’re taking action against it.”

    Whereas the methods used in Russia are much more insidious and far smarter. At least, if we’re to believe what’s in the book.

    The Russian state is also extremely good with technology. Remember “Russian hackers swung the US election” and “manipulated the Brexit vote”. We hear endless stories about “Russian state hackers” but none about our own.

    Is it that Russian state hackers are better than those in the West? Or is it that ours are just better at hiding their tracks? I’m guessing a little of both.

    Given that Russians have a flair for manipulation and technology, it should come as no surprise the Russian state has taken a big interest in crypto.

    And so today, with all the above in mind, that’s what we’re going to look into.

    What is Russia’s real relationship with crypto?

    Over the last 12 months there have been a number of stories linking Russia, and Putin in particular, to crypto.

    Let’s have a look at some of the most intriguing ones.

    Russian President Vladimir Putin Discusses Using Ethereum with Vitalik Buterin

    This is a story that hit (crypto) lines around the world last June. If you weren’t aware, Buterin is the brain behind Ethereum. He’s a 24-year-old Canadian-Russain. Born in Russia, he moved to Canada with his parents when he was six.

    Here’s the crux of what happened at the 2017 St. Petersburg International Economic Forum (SPIEF), taken from Bitcoin.com’s report:

    … Russian President Vladimir Putin met with Ethereum founder Vitalik Buterin. Putin also spoke about Russia’s economic reform and the digital economy, while the central bank discussed bitcoin’s taxation and its own digital currency.

    Oh yeah, that’s right, Russia is developing its own state-backed cryptocurrency. We’ll get to that in a second. First, here’s the video of that conference if you’d like to watch it. But be warned, it’s all in Russian.

    Buterin later confirmed on Reddit that he had spoken with Putin after the conference, but that this conversation wasn’t caught on video.

    Why did Russia want Buterin at this conference – well, most likely because, as we just saw Russia is creating its own state-owned cryptocurrency.

    As the Financial Times – and numerous others – reported in January:

    Putin considers “cryptorouble” as Moscow seeks to evade sanctions

    From the FT’s article:

    Sergei Glazev, an economic adviser to Mr Putin, told a recent government meeting that a cryptorouble would be a useful tool to get around international sanctions. “This instrument suits us very well for sensitive activity on behalf of the state. We can settle accounts with our counterparties all over the world with no regard for sanctions,” Mr Glazev said. He added that the cryptocurrency would be “the same rouble, but its circulation would be restricted in a certain way”, allowing the Kremlin to track its every move.

    By issuing a state-owned cryptocurrency it would let Russia know the dealings of all its citizens. All their transactions would be stored and accessible to the state on a ledger, along with their identities.

    This is part of the double-edged sword of crypto’s transparency. On the one hand it holds those in power to account. On the other, it could be used as a tool for ultimate control.

    That’s why many in the world of crypto are against “permissioned”, “controlled” or “privately run” cryptos. Most cryptos – like bitcoin, Ethereum, Litecoin and almost all of the ones you can buy on exchanges – are open source for that reason.

    Crypto wants to take away the power from central authorities, not give them more. This is also why there is a big movement for privacy-focused cryptos like Monero – see my previous article on Monero here – Enigma, Zcash and others.

    In fact, Ethereum will soon be implementing privacy features of its own. Make no mistake, Buterin is not a fan of authoritarianism. You can read his philosophical and political views on his Medium blog.

    “State-backed” cryptos take crypto technology and turn it inside out. They change a developed to increase fairness and freedom into one used for suppression and control.

    So it will be interesting to see what happens when (and if) the cryptorouble emerges.

    Now, as this article is already getting quite long, I’m going to split it into two parts.

    There is a whole lot more to Russia’s relationship with crypto, and I’m going to cover the rest in part two, which I’ll most likely send you on Tuesday.

    Until then,

    Harry Hamburg
    Editor, Exponential Investor

    -Read more at www.exponentialinvestor.com-

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  • The Pros and Cons of Trump’s Global To-Do List

    27.04.2018 • United KingdomComments Off on The Pros and Cons of Trump’s Global To-Do List

    Nick Hubble – Capital and Conflict (United Kingdom) –

    The Trump bonanza continues across the world.

    Profits are up on Wall Street. Earnings season is wildly exceeding expectations for companies like Amazon. Founder Jeff Bezos saw his wealth surge $12 billion in a day. Facebook shares were up 10% as none of the feared consequences of its recent scandals materialised.

    Caterpillar is seen as a bellwether for the global economy, so it’s particularly good news that it beat earnings expectations. The stock soared.

    Subway and Starbucks are the disappointers so far. But even they weren’t terrible.

    On foreign policy, Donald Trump’s belligerence is working too. A truly historic occasion is taking place in Korea as I write this. Only time will tell if Kim Jong-un is playing for time to fix up his nuclear arsenal, or keen on some sort of reconciliation. It’s much easier to negotiate after you’ve lobbed some missiles around and tested some bombs.

    Given I’ll soon be moving to a small Japanese town within range of Kim’s confirmed missile technology, you’ll be hearing plenty about this in coming weeks.

    Iran is next on Trump’s list of problems to solve by creating a bigger problem. Already the barbs being hurled are reminiscent of Korea a few months ago.

    Even trade policy seems to be going well for the American president. The Financial Times reports that the “Emerging market current account surplus falls to 20-year low” as “Global trade patterns start to normalise.”

    There hasn’t been much retaliation in the trade wars. Key European leaders are ing to the US to avoid a clash. Japan is seeking to help the US export its gas to get on Trump’s good side and rebalance trade.

    The president is sending three of his key staff to arch-enemy China to negotiate too. Two of them are particularly noteworthy.

    Trade representative Robert Lighthizer helped President Ronald Reagan pressure Japanese car manufacturers to move their plants to the US. That policy worked well from the American perspective, with huge Japanese and German car manufacturing bases in the US today.

    The new of Trump’s economic team, Larry Kudlow, has got his wish lately too. He’s famously in favour of a strong dollar, which broke a yearlong downtrend overnight.

    Before they even arrived, China’s president announced he’d lower car tariffs. That’s a huge boost to car companies around the world, including German and Japanese ones…

    If Trump can continue to improve global trade relations and balances, de-risk geopolitics and let the US economy roar, people might actually like him, secretly. But I suspect the key to his success is being disliked.

    The problem with good news all round is what it implies for the future.

    The implications of good news

    The synchronisation of business cycles is the most dangerous economic development of my lifetime.

    The entire world seems to go through booms and busts together these days.

    The business cycle used to be known as the trade cycle for a reason. Trade flows would balance out economies at different stages of the business cycle. The world’s economies were on countercyclical business cycles.

    A booming economy would eventually see its trade balance worsen, thereby stimulating a struggling economy. The countercyclical nature of these trade cycles kept the world as a whole on an even keel. Trade flows helped nations recover from downturns.

    But with everyone moving together on the same cycle, the world has changed completely. The booms and busts are going to be far worse without the dampening effects of trade cycles.

    Right now, we’re supposedly in the midst of global synchronised growth. But that good news gives away its own problem. After synchronised global growth, you are bound to get a global synchronised bust.

    The problem with this is that we don’t get the balancing effect of trade flows to drag nations out of the doldrums. The coming bust will be worse than ever.

    -Read more at www.capitalandconflict.com-

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  • “Haters Gonna Hate”

    26.04.2018 • United KingdomComments Off on “Haters Gonna Hate”

    Harry Hamburg – Exponential Investor (United Kingdom) –

    Technology is often compared to some kind of disease.

    The more successful a technology is, the more people “catch it”.

    Viral videos, Facebook, WhatsApp, Instagram, email – these are all forms of contagious technology.

    Once someone contracts a contagious technology they are compelled to spread it around their community.

    Because the thing with these contagious technologies is, if you’re the only one using them, they aren’t much fun.

    There’s no point having WhatsApp if you’re the only person you know using it. You can’t have a viral video without millions of viewers. Facebook isn’t much fun if you never get any “likes”.

    But the other thing all contagious technologies have is they are an easy sell. Sure, you always get a few people that are too cool to join in. But for the most part, contagious technologies are just that – contagious.

    You’ll notice that most of our recent contagious technologies have been built on top of what is probably the most contagious technology of our lifetime: the internet.

    The internet has had myriad new technologies built on top of it.

    And right now, we’re seeing the birth of a new technological foundation.

    Many are calling it “a new internet”. I wouldn’t go that far myself, but I do believe it could be just as fundamental to new technologies as the internet was to previous ones.

    Can you guess what this new foundation is? If you’re a regular Exponential Investor reader I think you probably can…

    I am, of course, talking about crypto.

    Just as when the internet did when it first gained popularity, cryptos have a number of issues to overcome before they gain widespread acceptance.

    And just as with the internet’s shortcomings, these issues will be ongoing. They will evolve with the technology itself and open up countless opportunities along the way for the people who can spot them.

    So today, we’re going to cover the top three issues facing crypto in the coming year.

    1: speed

    By speed, I simply mean transactions per second (TPS).

    I’m sure you’ve heard the argument many times that bitcoin simply isn’t fast enough to be used on a large scale.

    Right now, bitcoin can process around seven TPS. Compare that to VISA’s TPS limit of around 56,000, and you can see the issue.

    This is usually the first argument we see against cryptos.

    However, this issue is actually close to being solved.

    As I have written about before, bitcoin’s Lightening Network is now in the testing phase. It will, according to its creators, provide:

    Instant Payments. Lightning-fast blockchain payments without worrying about block confirmation times. Security is enforced by blockchain smart-contracts without creating a on-blockchain transaction for individual payments. Payment speed measured in milliseconds to seconds.

    Scalability. Capable of millions to billions of transactions per second across the network. Capacity blows away legacy payment rails by many orders of magnitude. Attaching payment per action/click is now possible without custodians.

    Low Cost. By transacting and settling off-blockchain, the Lightning Network allows for exceptionally low fees, which allows for emerging use cases such as instant micropayments.

    Cross Blockchains. Cross-chain atomic swaps can occur off-chain instantly with heterogeneous blockchain consensus rules. So long as the chains can support the same cryptographic hash function, it is possible to make transactions across blockchains without trust in 3rd party custodians.

    Now bear in mind, the above is lifted straight from Lightening Network’s website. So of it will talk up its own product. However, it does seem like a viable solution to bitcoin’s TPS problem.

    And as I have also written before, Ethereum has its own solution that’s currently being worked on as a priority. This solution is called Plasma, and it also claims to enable millions to billions of transactions per second.

    Adding to this, we also have other, newer cryptos that were built with this issue in mind, such as NANO and IOTA.

    As I wrote about last week, while most networks will slow down as more and more people use them, IOTA’s was designed to do the opposite. The more people that use it, the faster it gets.

    So on the one hand we have established cryptos that are evolving to meet the needs of greater adoption and more users. And on the other we have newer cryptos that can deal with unlimited scaling by default.

    Both solutions, in theory, should work well. And if they do, the “speed” issue that has plagued cryptos since their inception should be solved.

    2: power consumption

    How can cryptos claim to be the future of technology when they waste more energy than a medium-sized country?

    This is a big problem to solve. Especially as one of crypto’s main aims is to make the world a fairer and more accountable place.

    Well, the solution here is to switch to a different way of securing the network.

    Right now, bitcoin and Ethereum use a proof-of-work model (POW) to secure the network. This worked well when their networks were young and small, but as their networks expanded, so too did their energy consumption.

    The solution is to switch to a different method to secure the network. Ethereum is working on this right now, and it is far along in its development.

    Ethereum plans to switch from POW, which uses tons of energy through computers “working” to solve mathematical problems, to proof-of-stake (POS).

    POS uses a negligible amount of energy compared to POW and its proponents argue it is even more secure. It also comes with the advantage to investors that they can “stake” their crypto and get a reward for doing so.

    Just as miners currently get rewarded for securing the network, “stakers” will also be rewarded. They will get a sort of crypto dividend in return for locking up their crypto for a set amount of time.

    There are a number or cryptos that already use forms of POS to secure their networks and they are working well.

    And again, some cryptos have been built from the ground up to not require miners to secure the network and so will never use a lot of energy.

    However, none of that helps us with bitcoin’s energy problem. It won’t be changing to POS any time soon, if ever.

    So, those lines about bitcoin consuming more energy than any given country are set to continue. The solution to this is simply for people to switch over from bitcoin to cleaner, more advanced cryptos.

    But remember, energy consumption is not an issue with newer cryptos. It’s bitcoin’s issue. And it could ultimately be the one that topples bitcoin’s crown.

    3: haters

    “Haters gonna hate” is a phrase familiar to anyone with any interest in pop culture.

    It’s a meme, it’s a slogan, it’s a song title, it’s probably even a brand.

    When people say it, they mean that hateful people will always find a way to criticise you, no matter what you do. So don’t let the haters bring you down.

    And crypto has a lot of haters.

    Many of crypto’s haters hold positions of power and authority. And I’m not just talking about “old money” banks. Some of crypto’s biggest haters come from the press.

    Take the Guardian, for instance. I have only ever read one remotely positive piece relating to anything crypto on its website. I’m not sure exactly who has set the agenda at the Guardian, but someone definitely has. Most likely someone with a lot to lose when cryptos succeed.

    The best one I’ve seen from the Guardian yet came a few months ago: “The currency of the far-right: why neo-Nazis love bitcoin”.

    Of course, it was absolute chum and pulled apart in the comments thread below the article. But that doesn’t matter. The Guardian has a big sway.

    Cryptos are a disruptor; current industry leaders and gatekeepers do not like to be disrupted.

    Crypto promises to:

    Free people from the data scandals we see with Facebook

    As I’ve written before, cryptos like Enigma could solve this problem altogether and create fairer social networks.

    Cut out the fees and middlemen with money transactions

    This is the reason why bitcoin was created in the first place. To take power away from the banks and corrupt institutions after the financial crash of 2008 and put it back into the hands of the people.

    Let us secure and control our own identities

    No more giving Google, Facebook, PayPal or Amazon the keys to your life and credit cards. Cryptos can be far more secure than any centralised system, and again, put you in control of your own data. So the tech giant’s revenue would dry up. Remember, you are Google, Facebook et al’s product. You are nothing more to them than a data stream to sell.

    Provide better solutions for monetising content and revolutionise advertising

    This is a big one. Think about how big the world of advertising is. And think how much you hate adverts. Crypto is providing solutions to this problem. Good solutions.

    Many big YouTubers (people with billions of combined views and tens of millions of individual subscribers) are now promoting cryptos such as Basic Attention Token (BAT) as a better way to get paid by their viewers.

    And that’s just a small part of what crypto is aiming to do. Well, more accurately, what crypto is already making a good start on doing.

    When you disrupt that many industries and threaten that many powerful institutions, you can bet you’re in for some hate.

    What the internet did to the music, TV and retail industries is still fresh in everyone’s memory.

    Crypto will cause a new wave of disruption to established players all over the world. And this time they can see it coming. So of course, it comes in for a lot of hate.

    Mind you, the most vehement of all the haters are the embittered.

    These are the people who watched bitcoin go from £500 to £10,000 and all the while thought about investing, but didn’t.

    You will find them on comments sections everywhere just railing against the idea of cryptos. Their arguments are usually along the same lines as the Guardian’s. Something like, to borrow a Guardian line: “Bitcoin is based on the blockchain pipe dream”.

    These embittered people are suffering from cognitive dissonance, like the fox in Aesop’s fable.

    They are angry at the mere fact cryptos even exist because they feel like they have missed the boat. In reality, they haven’t – not yet.

    Cryptos rise and fall in price all the time. Right now the total market is at around half the value of its all-time high in January.

    If you believe crypto will overcome its problems and continue to rise and change the world. Now is a great time to invest.

    Until next time,

    Harry Hamburg
    Editor, Exponential Investor

    -Read more at www.exponentialinvestor.com-

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  • The Problem Is When Humans Get Involved

    26.04.2018 • United KingdomComments Off on The Problem Is When Humans Get Involved

    Nick Hubble – Capital and Conflict (United Kingdom) –

    If you know something is going to happen in the future, when do you react to it?

    More importantly for the purpose of making money in financial markets, when is everyone else going to react? Because that’s when prices move.

    One of the core theories about markets is that they can anticipate. They look to the future and prices react accordingly. The year’s weather forecast affects crop prices on the Chicago exchange many months in advance of planting, for example.

    But how far a do markets look when they establish prices?

    An academic will smile dismissively if you ask that question. The markets discount the future in a way that gives more weight to the immediate future, and barely any weight to what’ll happen many years from now. This means the price is always a reflection of what’s going to happen in a balanced and theoretically perfect way.

    There’s some truth to that. The further into the future you go, the more uncertain it is, so the less it should weigh on your estimation of a fair price.

    The problem is when humans get involved. Especially humans who are incentivised on a quarterly basis, or the election cycle. For example, many traders are quite happy to pick up pennies in front of a steamroller. Writing options is very lucrative until you blow up. Everyone knows it’s going to happen, but some still make the mistake.

    Let me ask the same question a little differently. If you know a crisis is going to happen in 12 years’ time, when do you react?

    The pension panic is coming

    The Government Actuary’s Department calculated the National Insurance Fund (NIF) will run out of cash by the mid-2030s. That’ll put the state pension and other benefits squarely on the government budget’s expenses column.

    Think about the momentum of the change here. We used to build up the value of assets in the NIF by contributing more than withdrawals. Then we started to draw down the assets. Which means a bigger outflow than inflow.

    When the assets hit 0, in the 2030s, the size of the change will be vast. Suddenly, a huge bill will hit the government budget each year which was previously not there at all. It’s not a gradual change. It’s a total shift.

    Adding such a huge expense is something even politicians can’t ignore. So what’s going to give? The pension age, the size of the benefit, taxes…?

    Probably all three given the size of the problem. The valuation of unfunded state pension liabilities is more than double UK GDP.

    Baroness Ros Altmann, Tory pensions minister from 2015 to 2016, explains:

    The current provision for state pension payments is not enough to meet the cost of future pensions. Changes will be required if forecasts are right. There is a potential issue on inter-generational fairness if these forecasts are right as younger workers face paying more to secure their state pension.”

    Which is of course rubbish. The pension uses a so-called “pay as you go” method where money is transferred from the young to the retired each year. If you pay into the system, you are not going to secure your state pension, you’re going to pay someone else’s.

    The scary part is that the UK is already paying a comparatively low pension. According to the OECD, our state pension is one of the lowest in the developed world as a percentage of average earnings. That’s a bit misleading because we use alternatives to the state pension to supplement income. So let’s look at private pensions next.

    I have to say, relying on a company you worked for to pay your pension strikes me as a uniquely bad idea to begin with. Companies fail. Especially when they’re saddled with vast pension liabilities.

    About two thirds of the £2.3 trillion in corporate liabilities is unfunded. That same shift to the expenses column is going to occur at companies too. Good luck competing on a global stage with that hanging around your neck.

    Political consequences of overpromising

    The solution to keep the state pension going is about £1,000 more per year per worker, assuming the pension age rises to 70.

    The battleground is clear. Will young people agree to pay and will retirees agree to cuts?

    Supposedly it’s political suicide to meddle with pensions. But the impact on pension costs if we don’t raise the pension age or cut benefits is huge.

    Meanwhile, the politics of pitching an increase in taxes on the young to pay for the state pensions of the old is a bit iffy. People used to be persuaded by the idea that they’re adding to a pool of assets that the NIF invests and will then pay out to you when you retire. It looks like you’re supporting yourself.

    If the NIF runs out of money, it won’t be a fund anymore, it’ll be a transfer. Without the illusion of adding to an asset pile to save for your future, will the premise of this form of welfare hold up politically? Imagine asking all those boomerang kids to support their parents…

    Sure, the political power of the pensioner will be immense. And they’ll be politically active. Especially given they laboured their working life under the illusion they were contributing to a vast fund of assets that’d be waiting for them in retirement. When that fund runs dry in 12 years, they’ll be furious.

    But think about how this intergenerational claim subverts society. It constitutes a rather large breach of a social contract both ways. Hopefully it’ll be politicians who cop the blame. Especially given the size of their pensions!

    My biggest fear isn’t for the state pension, the company pension or the political fallout. My greatest fear is for financial markets. Because even those of us who think we’ve prepared for this debacle by saving and investing outside the government system could be caught up in the collapse.

    -Read more at www.capitalandconflict.com-

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  • These Wars Are Not “Mistakes.”

    26.04.2018 • United StatesComments Off on These Wars Are Not “Mistakes.”

    Bill Bonner – Bill Bonner’s Diary (United States) –

    BARCELONA – We left off yesterday trying to connect the dots.

    Abandon traditional forms, rules, and customs, we noticed… and you are most likely on your way to disaster.

    Most “innovative” architecture, for example, is usually ugly and often dysfunctional.

    There are hidden lessons embedded in tradition. We don’t really know why chimney tops have corbelling… or why many languages have a subjunctive mood… or why people smile and say good morning, even to total strangers.

    But they do.

    Made to Be Broken

    Rules are made to be broken, of course. You could just say, “go to hell” to everyone you meet. Some people do.

    But they are rare… and rarely invited to weddings or dinner parties. Readers are invited to try it… and report back.

    We don’t know exactly why the traditional “rules” are what they are. And we don’t know the consequences of breaking them. But there is almost always a price to pay.

    On this day in 404 AD, by the way, the war between Athens and Sparta, known in history as the Peloponnesian War, ended. It was an on-again, off-again war… that was waged over 27 years.

    At low points, the Athenians wanted to stop the killing. But the Greek statesman Pericles, in the famous “funeral oration” speech recalled by Thucydides, bade them continue:

    So died these men as becomes Athenians. You, their survivors, must determine to have as unfaltering a resolution in the field, though you may pray that it may have a happier outcome.

    Bad advice.

    By the end of the war, almost all of Athens’ soldiers had either been killed or captured and enslaved. The Athenian city walls were torn down. And democracy, an Athenian innovation, was suspended.

    “It was the will of the gods,” said the ancients.

    Will of the Gods

    In these pages, we try to link the trends and policies of today with the will of the gods.

    The gods are jealous; they don’t like to see people contradict or ignore their “natural” laws.

    The “laws” of finance are pretty simple.

    “As you sow, so shall ye reap,” it says in the Bible (Galatians 6:7). “By the sweat of thy brow you will eat food until you return to the ground,” it adds in Genesis 3:19.

    You can’t fake it. You can’t pretend to sow, with fake seed or fake money. You can’t take a quick shower and pretend to be sweating.

    It won’t work.

    The gods cannot be deceived. The great classical economists realized long ago, for example, that fake seeds produce fake food… and fake money produces a fake prosperity.

    And a boom purchased on credit always turns into a bust of credit deflation. Why, how, and when that credit bust will come is what we look for – in our dot patterns – in this Diary.

    But we can’t help but notice similar patterns in other aspects of human life. One of the lessons learned over thousands of years of bitter experience was the one that Athens ignored: You shouldn’t go to war unless you have to.

    “He who lives by the sword, dies by the sword,” is an expression attributed to the Greek playwright, Aeschylus, or the Gospel of Matthew.

    Dying by the sword is not something most people would like to do. So the reasonable inference is that you should avoid picking fights.

    But that is a lesson that is easy to forget – especially when you get too big for your britches. Then, you can pick fights with people who pose no real threat to you.

    We turn to Wednesday’s New York Times for illustration:

    Murky war ramps up deep in Niger desert. U.S. will use drone airfield to strike at extremists in West and North Africa.

    What the U.S. has against African “extremists” was not clarified.

    Marching in Step

    The U.S. media doesn’t seem to have read Thucydides. Otherwise, it might have mentioned that swinging the sword around in Africa is not likely to have any better results than hacking through the Middle East.

    But the media is marching in step with the military suppliers. FAIR, a national media watch group, reports:

    A survey by FAIR of the top 100 papers in the U.S. by circulation found not a single editorial board opposed to Trump’s April 13 airstrikes on Syria. Twenty supported the strikes, while six were ambiguous as to whether or not the bombing was advisable. The remaining 74 issued no opinion about Trump’s latest escalation of the Syrian war.

    Nor did any major media in the U.S. even bother to investigate the alleged reason for the attack: the use of chemical weapons on civilians.

    Later, when it became clear that the whole story was likely fake news, the media described the bombing in Syria as “symbolic,” or a “warning” to the Assad regime.

    Syria may or may not have used gas in Douma, but it won’t do it again!

    Meanwhile, you might expect Democrats in Congress – which is supposed to be the sole custodian of the “war power” – to show a little backbone. But no. In These Times reports:

    Ninety-two percent of Senate Democrats and independents failed to substantively dissent against Trump’s April 13 airstrikes.

    Where objections are raised by Democrats and independents, they most frequently take the form of procedural and legal complaints, which fall short of making a judgement on whether the military intervention itself is good or bad.

    Any fool can see that these wars will be, at best, useless… at worst, disastrous.

    But Congress and the administration are in favor of them. The media is behind them. And Big Business and Wall Street make money from them.

    These wars are not “mistakes,” in other words. They are intentional uses of the sword – not to win wars, but to win money and power.

    In other words, these are not fools behind these lethal U.S. adventures. Instead, they are knaves.

    More to come…

    Regards,

    signature

    Bill

    MARKET INSIGHT: THE CASE OF THE DISAPPEARING PUBLIC COMPANY

    Editor’s Note: For years, Bill has warned about the unseen consequences of artificially low interest rates. Today, E.B. Tucker, one of Casey Research’s top analysts, reveals one more side effect of the Fed’s “EZ-credit policies.”

    By E.B. Tucker, Editor, Strategic Investor

    The U.S. stock market is worth $29 trillion dollars today. Twenty years ago, it was worth $12.9 trillion. That’s an increase of 125% in 20 years.

    U.S. GDP looks about the same. Twenty years ago, it was $8.9 trillion. Today, it’s $19.8 trillion. That’s a 122% increase in 20 years.

    That’s why we find it so alarming that there are half as many listed companies in the U.S. today compared to 20 years ago. You can see what I mean below:

    Chart

    The number of public companies used to grow in step with the economy. Back in 1996 there were 8,025 publicly traded companies. Today, there are around 4,333. That’s a decline of 46%.

    It’s very American to build a business and take it public when you need access to additional capital. That’s why I’m alarmed at the drastic reduction in public companies. The good news is that I see why it’s happening.

    For the last decade, the Fed made borrowing easy for people that didn’t really need the money. After all, it’s not too hard to pay interest on a 0% loan. While you and I couldn’t get those loans, the most connected borrowers could.

    One big beneficiary of this money experiment was the private equity industry. In turn, it played a big role in reducing the number of public investment options.

    Private equities would use these ultra-low interest rates to take out a loan and buy a controlling interest in a publicly traded company. After taking the company private, the private equity simply used the cash flow from the business to service the loan.

    Without access to ultra-cheap borrowing, the private equity industry would not have been able to buy up an unprecedented chunk of the economy.

    I’ve seen this firsthand.

    Just after college, I worked as a sales rep for a manufacturing firm. We produced mattresses in 26 factories across the U.S. The owners sold the company for $800 million to a private equity firm. Within months of it taking over, I learned that the private equity firm had taken out a massive loan against the business.

    Here’s what’s interesting.

    It didn’t use that money to invest in new factories or equipment. Instead, it paid a huge dividend, equal to almost the entire purchase price, to itself. This meant that the business merely had to generate enough income to service the massive loan. If it could do that, its private equity firm owners had a risk-free investment.

    Recently, the Toys “R” Us bankruptcy made lines. As Bill reported at the time, private equity firms took the company off the market, loaded it with debt, paid themselves rich dividends, and left the company for dead.

    Toys “R” Us was a victim of this trend.

    It won’t be the last.

    – E.B. Tucker

    P.S. I urge you to check out my brand-new video presentation on a major event happening on July 21, 2018. That’s when a secret meeting will take place that could change America forever.

    Leaders from the top 20 countries are meeting to discuss an important change to the money we use…

    • If you’ve got savings in American dollars, you could now face a new tax
    • If you’ve got money invested, some popular investments could now be deemed worthless.

    Watch my urgent video now to see exactly what’s going on – and what to do with your savings.

    -Read more at bonnerandpartners.com-

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  • What to Expect Now That We’ve Crossed the 3% Threshold

    25.04.2018 • FranceComments Off on What to Expect Now That We’ve Crossed the 3% Threshold

    Simone Wapler – La Chronique Agora (France) –

    The yield on 10-year US Treasury bonds has just crossed the symbolic and psychological threshold of 3%. This can upset your savings.

    Since their peak in January, stocks have fallen around the world:

    • Chinese equities lost 14% in Shanghai Composite Index
    • US stocks fell 8% if we refer to the S & P 500
    • European stocks fell 5% based on the Eurostoxx 50

    In theory, this means that investors anticipate fewer profits in the future.

    But stock movements are not really serious. What conditions the evolution of your financial savings and even real estate are the rates – and precisely the long rates.

    The 10-year US Treasury has just passed the fateful threshold of 3% yesterday.

    If long rates go up:

    • Real estate drops as fewer buyers come for the same property
    • It’s less easy to buy shares on credit with dividends above interest rates
    • The zombie companies are clear: they are those who are indebted and whose interest rates are higher than the profits
    • Refinancing (repaying a loan by borrowing again) becomes very painful
    • Investments (the jobs of tomorrow, as the Germans say) are more expensive
    • The weight of government debt is growing and exploding budgets
    • It will take more taxes or less allowances, or both, and it will weigh on consumption

    This is the end of business models based on credit consumption financed by allowances.

    To avoid all these annoyances and painful but natural adjustments, our great all-knowing planners have made long-term rates fall since 1981.

    After 37 years of falling rates, easy money and a wonderful world, is hell possible?

    The 10-year-old American is the reference on the markets. It’s been 37 years since it’s been down. Most investors, entrepreneurs, governments have never had to face a sustainable rate hike.

    In 1971, the dollar was cut gold. Currency has become credit. Oil-exporting countries then defied the dollar, and inflation has been buoyed by oil shocks. Long rates rose to more than 15% in 1981.

    Confidence has returned. Everything has returned to the new monetary order. Global debts were swelling while interest rates were falling.

    Evolution of the 10 years since 1971

    Real estate prices, stocks, bonds have soared. The public deficits widened but everything was going for the best in the best possible worlds. Sometimes, in the face of a rise in short-term rates, taxes fell to try to reduce deficits. Taxes, but never public spending.

    We lived in a wonderful world. A world that has lasted 37 years. Who still remembers the old world, where bankruptcy was a natural selection and where interest rates reflected the savings available?

    Is this recent rise in the 10-year interest rate really serious? Will the Fed not act to bring them down?

    Evolution of the 10 years since 2016

    “To act”, for the Fed, would be to create more credit to lower the price. The Fed has decided to do the opposite: it makes credit more expensive and it buys less Treasuries while Trump has planned to issue more, MAGA ( Make America Great Again ) requires. The rise in rates is the consequence of these decisions.

    If the Fed denies itself, who will still have confidence in the dollar and treasury bills? Would the current rise in oil prices desired by the producing countries not be a test, as during the oil crises of the 1970s?

    Everybody makes fun of the debt when the rates are low.

    But if interest rates become honest again? You do not even think about it!

    Can you imagine a world loaded with $ 237 trillion in debt (almost four times the world’s GDP) with interest rates at say 5%?

    In 1981, global debt was only $ 10 trillion, which was once the world’s GDP. Rates could go up to 15%.

    A world of honest rates is no longer possible today without overhauling the global monetary and financial system. MMHA – Make Money Honest Again – will be the imposed program. [Editor’s note: To prepare your savings for the shock that is looming, it’s here . Just take a few simple steps immediately.]

    -Read more at la-chronique-agora.com (French)-

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  • Research Tricks to Guide Your Crypto Hunt

    25.04.2018 • United KingdomComments Off on Research Tricks to Guide Your Crypto Hunt

    Harry Hamburg – Exponential Investor (United Kingdom) –

    When it comes to stockmarket investing, there are some basic rules most smart investors follow.

    And there are countless books, websites and TV shows that lay those rules out and tell people how to apply them.

    Of course, much of the time, it seems like those methods don’t really work too well. Which is why we have seen the huge rise of index tracking funds over the last few years.

    I can sympathise with the argument. I’ve sure you’ve seen the statistics. Around 1 in 20 active funds beat the index, so why not just invest in the index? You’ll save money on fees – and you’ll make a higher rate of return.

    However, in crypto investing things are different. There are no actively managed crypto investment funds. And there is no “index” to track.

    I’ve seen a number of vehicles come out that actually claim to work like a crypto index tracker. But then you look into their holdings and they only invest in around ten cryptos. And many of those ten are not, in my opinion, good picks.

    The world is very different now

    No. when it comes to crypto investing, most traditional investment rules don’t really work. After all, in crypto, you’re not investing in a company so much as an ecosystem.

    The crypto markets run on sentiment, and they are highly unpredictable. Anyone who tells you they know where the market is ing on any given day is either openly lying to you, or delusional.

    For instance, given all of the advancements, adoption and investment we’re seeing into cryptos, as well as the huge potential the technology itself has, I believe over the medium to long term, prices will be much higher than they are today. And if you’re reading this, I’d wager you probably agree.

    However, that doesn’t mean I claim to know what crypto prices will be tomorrow, next week, or even three months from now. As you know, crypto prices can collapse or quadruple in a matter of days, or even hours, for no apparent reason.

    In the short term, crypto is highly unpredictable. But like many things, when you expand the time frame, those prices make a lot more sense.

    Given all the evidence I’ve seen and all the research I’ve done, I believe that in a year or two from now the crypto market will be worth many times what it is today. I also believe that many of today’s popular cryptos will fade from existence.

    Many cryptos will rise to unprecedented highs, but many more will fall by the wayside.

    So that brings us to the question, how can we work out which cryptos are destined for greatness and which are destined for failure?

    To help me answer that question, I devised my own crypto ranking system. I’m going to lay it out here so that, should you choose to, you can adapt and use it for yourself.

    Should I have come up with a flashier name than just “the crypto ranking system”? Maybe. But I wanted the name to reflect its transparency and simplicity. And giving it a flashy name just seemed a bit fake.

    Introducing my crypto ranking system

    In the world of crypto it is extremely important to do your own research (DYOR). Things change, new information comes in by the day and new revelations unfold. It’s hard to stay on top of everything.

    I dedicate hours and hours every day to researching the latest news and developments in crypto. But even I don’t know a lot of what’s happening in this space.

    So before you put any money into any cryptos, you need to do your own research into them.

    Here’s how you can go about it:

    Read the white papers – actually do it. Seriously.

    White papers are where the creators of the crypto lay out their plan. They explain – usually very simply – how it works and what it hopes to achieve.

    This is the starting point of your research into any crypto you want to invest in. You can learn an awful lot from the crypto’s white paper.

    Go on the crypto’s website

    Have a look around the crypto’s website. Don’t get suckered in by a flashy website. Look for the section on the team and check their backgrounds. If they have a question mark over their face or don’t give much background, steer clear.

    There was a fairly high profile ICO a couple of months ago that used a picture of Ryan Gosling for the face of one of its team members. Seriously. It was soon discovered and went viral in the crypto community.

    It was pretty funny, but some people who didn’t do their own research will surely have given that ICO money and probably won’t ever get it back.

    Look for any partnerships they have and get a general feel for the crypto.

    Take a look at the Reddit communities

    Reddit is one of the best places to find information on any crypto. You have hundreds, if not thousands, of people adding to the debate. If they post something useful, they get an upvote. If it’s false or not useful, they get a downvote.

    The upvoted posts and comments rise to the top. So it makes it easy to get good information fast.

    The only thing with Reddit communities is that they will all shill their own coin, and mostly only post positive news about it.

    So it’s also a good idea to search for posts about that coin on other crypto Reddits so you can get a more balanced view.

    Now, on to the fun part – how we rank cryptos.

    Each crypto is be ranked out of 45, and then given a percentage

    The ranking system has seven parts, just like the seven deadly sins or the seven virtues. They are:

    Scope

    This is the crypto’s vision. What it hopes to achieve and how much impact that could have on the world.

    This is ranked out of 10.

    Team and partnerships

    It doesn’t matter how grand your vision is without a strong team behind you, and without connections in the right places. A strong team with a history of success and strong ties to industry can set a crypto flying.

    This is ranked out of 10.

    Why the tokens have value

    So you have a grand vision, a strong team and good connections. But in your system, will the actual crypto – the token people will invest in – be needed?

    You get a lot of cryptos that sound like great ideas, but when you look into them, there is really nothing giving the tokens any value. In extreme cases, the entire crypto could function without tokens at all.

    This is ranked out of 10.

    Passive income potential

    This one is sort of like a bonus. It’s a guaranteed income. Most people don’t realise this, but a lot of cryptos pay out the equivalent of dividends just for holding them, or for doing a minor bit of work.

    If your crypto is paying you dividends, you have the power of compound interest on your side. And what’s more, if that crypto really goes up, you have a viable passive income on your hands.

    This is ranked out of 5.

    Competition

    This one is straightforward. How much competition does this crypto face, and is it already a market leader?

    As this area is so new, and as there is competition for all cryptos from many different areas, I have put slightly less importance on this factor.

    That is why this is ranked out of 5.

    Ease of use

    Now, cryptos by their nature are complicated. It’s a big idea to get your around.

    However, for cryptos to truly hit the mainstream, they need to be easy to the layperson to use.

    Most cryptos get this. Think about Apple, it’s not the best or the fastest or the most advanced. It is simply the most easy to use. It just works.

    However, in the world of cryptos I don’t see ease of use as being quite as important as some of the other components in this ranking system.

    So this is ranked out of 5.

    Caveats

    Of course, we need a place to dock points. A crypto may be promising in all the above areas, but it may have a glaring flaw that needs to be taken into account. That’s why I’m including a caveats section in the ranking.

    This will be a negative rating and will bring down the overall score. A score in this category is a negative, not a positive number.

    This is ranked out of (minus) 10.

    Total

    All of this together gives us a theoretical perfect score of 45.

    Of course, no crypto is going to achieve a 45, but a higher score indicates more potential and most likely a better investment – in my eyes at least.

    Now, as I said, this ranking is just a starting point. It’s important that you build on it with your own assessment before you put any money in.

    Along with this ranking, I also include these other sections. These are more time focused, so they don’t figure into the score.

    Current market cap and what that means

    Just as with stocks, the market cap of a crypto has a huge bearing on its risk level and profit potential.

    A smaller market cap means it has big potential, but is likely a lot riskier.

    A bigger market cap means it’s likely more stable, but less likely to rocket thousands of per cent in a matter of weeks.

    Again though, this is crypto, not stocks. And often some of the highest market cap coins drop 70% in value, or rise 500% in value in a matter of days.

    Trigger points

    Are there any upcoming developments, announcements, partnerships or breakthroughs?

    In the world of crypto, a new release, partnership or rebranding can send prices flying.

    Conclusion

    As you can no doubt guess, this is a paragraph or two on my overall thoughts about the crypto, taking all of the above into account.

    The ranking system is simple. And it’s simple for a reason. There is so much that is unknowable, new and untested in crypto, it’s impossible to set any firm conclusions.

    I’ve seen other crypto analysts who use spreadsheets to develop in-depth cost, worth, and fair value assessments. But how can you possibly know the “fair value” of an asset that is so new and undiscovered?

    The potential of cryptos is far beyond what most people realise.

    Then again, how can you have such a definite system to assess an asset class that will regularly drop 50% for no discernible reason?

    The one thing you can be sure of in the world of crypto, is that you can’t be sure about anything.

    No one knows how big this industry will become. No one knows how big the next bull run will be, or how long it will last. Just as no one knows when the next crash will be or how long that will last.

    I have developed this simple ranking system that makes it easy to see the best and worst points of a particular crypto. It’s a starting point for you to do your own research. Nothing more, nothing less.

    So that’s how it works. If you are thinking of investing in any particular crypto, I’d advise you to run it through this system yourself to give you a better idea of its potential.

    In my first issue of FTI: Crypto Wire I have run my three favourite platform cryptos, as well as my absolute favourite crypto right now, through this ranking system.

    If you’d like to find out what those cryptos are, and how they held up, you can take out a trial of FTI: Crypto Wire here.

    As well as ranking those four cryptos, in the first issue I lay out exactly why I believe cryptos will change the world, which industries they are disrupting, and what we should be looking out for as crypto investors.

    If you’d like to read it, and find out my favourite cryptos and their rankings, you can find out more here.

    And as an Exponential Investor reader, you can claim a 71% discount on the normal price using this code: CWSAVING.

    Until next time,

    Harry Hamburg
    Editor, Exponential Investor

    -Read more at www.exponentialinvestor.com-

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  • The Dow’s Dip Suggests the Decades-Long Downtrend in Rates Is Over

    25.04.2018 • United KingdomComments Off on The Dow’s Dip Suggests the Decades-Long Downtrend in Rates Is Over

    Nick Hubble – Capital and Conflict (United Kingdom) –

    For months it’s been all about 3%. Investment analysts, traders, managers and commentators all agreed: if the ten-year US Treasury bond hits 3%, something is going to snap.

    Well, according to Bloomberg radio, yesterday was the big day. For the first time since the very beginning of 2014, the yield rose above the 3% mark. And on cue, US stocks tumbled. It was their fifth straight losing day.

    Why? What’s so magical about that particular level? Depends who you ask.

    First, there’s technical analysis. Chartists watch symbolic numbers on charts based on trend lines, moving averages and much much more. 3% is supposedly a crucially important level. 3.05% was last seen in 2011, so that’s the next milestone.

    Breaching these lines in the sand suggests that the decades-long downtrend in interest rates could be ending. To be clear, it suggests a higher probability that the downtrend has ended than if the yield had turned back down without breaching the level. Technical analysis is all about getting an edge it terms of probability, not about finding a false sense of certainty.

    Next up are the equity analysts. A 3% yield is enticing to the income investors who have been buying dividend stocks while grumbling about low interest rates. As expected, dividend stocks were pummelled yesterday as investors rotated out of stocks and into debt. Hence the ten-year yield quickly fell back below 3% again as investors bought bonds.

    Bond experts see the 3% level as the point at which debt starts becoming unaffordable. How many mortgage payers, zombie firms and governments around the world can afford to refinance government debt at higher rates? Remember, the ten-year yield is a reference rate for a huge list of other interest-bearing securities.

    With debt to GDP levels above 100% for governments around the world, and US interest rates at 3%, you need a lot of GDP growth to stop your interest bill from growing faster than your economy.

    For me, the real worry is a little different. Rising rates suggest we are late in the cycle of boom and bust. Remember, each downturn is preceded by tightening monetary policy. And each time, they’ve only managed to tighten less than the previous cycle. Which also means they can cut less when the downturn comes.

    But there’s something uncomfortable about allusions to what usually happens. 2013 and 2014 saw the taper tantrum strike markets. And it suggests something unfamiliar about cycles.

    The taper tantrum remembered

    Back in 2013, the Federal Reserve announced it would slow down its quantitative easing (QE) policies. The market wasn’t ready for the minor change. A long list of investments that are not supposed to be correlated all fell simultaneously.

    What actually happened still isn’t clear. The change to the Fed’s policies was enough to cause chaos. Why did the announced adjustment wreak such havoc?

    Some say it’s because the change was unexpected. That’s why central bankers are now so careful to announce policy years in advance. Japan’s central bank recently announced its plan to return to 2% inflation sometime in the next five years. Perhaps it’s planning to hire Arsene Wenger to achieve this within the timeframe.

    But perhaps central bankers are completely underestimating how reliant the market is on them. The price of assets is set by the marginal buyers and sellers. If the central bank is active at this margin, then stepping out of the market is a huge change. Where does the market ratchet down to?

    Can something snap?

    What did we actually learn in 2014? That higher rates and less central bank action are dangerous? Or that this risk is rather easy to resolve? You just lower rates back down again and return to QE.

    This strikes at the heart of the biggest question in the market right now. What problems can’t money printing solve in the short term?

    If a spiking ten-year yield is the problem, central banks can just push the yield back down again. It’s just a question of how much money it takes. And central bankers are hardly shy about adding zeros.

    Perhaps this is how Akhil Patel’s predictions will play out. In Cycles, Trends and Forecasts, he’s predicting another boom. At worst, there’ll be a mid-cycle slowdown.

    You can find out how to position yourself for the coming boom here. And if I’m right that central bankers can paper over any problems, then I agree with Akhil about what’s coming next.

    But for one small detail. Which you’ll discover in your inbox soon.

    Back to today’s topic…

    The amusing trade-off between monetary policy and debt in this cycle is the lack of a true recovery to begin with. Fiscal positions around the world haven’t exactly recovered. The US deficit is vast and growing. The UK and Germany are among the most prudent, but hardly doing well.

    Where is the recovery? And what happens if we don’t really get one?

    If monetary policy hikes rates when debt to GDP levels are high, it hikes the interest bill too. How can government budgets recover when growth comes with higher interest bills?

    They can’t. Trouble is baked in.

    Until next time,

    Nick Hubble
    Capital & Conflict

    -Read more at www.capitalandconflict.com-

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  • Misconceptions of the American Employee

    25.04.2018 • United StatesComments Off on Misconceptions of the American Employee

    Bill Bonner – Bill Bonner’s Diary (United States) –

    BARCELONA – The Dow stumbled yesterday, ending down some 425 points.

    Nothing serious. More importantly, the yield on the 10-year Treasury note has crept up towards 3% this week, briefly hitting the milestone on Tuesday [more details in today’s Market Insight below].

    Our research department is sticking with its “Extreme WarningDoom Index position, pending more data.

    No Sure Thing

    But our old friend, economist Mark Skousen, writing in The Wall Street Journal, says the underlying economy is stronger than people think.

    Here’s Mark:

    The Bureau of Economic Analysis will release its preliminary first-quarter growth figure on Friday. According to the Atlanta Fed consensus tracker, economists are predicting gross domestic product to have risen at a meager 2% annual rate. But a powerful behind-the-scenes indicator suggests the real rate may turn out to be significantly higher.

    “Gross output,” or GO, reflects the full value of the supply chain – the business-to-business spending that moves all goods and services toward the final retail market. Based on my work and research by David Ranson, chief economist at HCWE & Co., changes in the supply chain are a strong leading indicator of the next quarter’s GDP.

    Our guess is that the economy is weaker, not stronger, than people think. The low unemployment number, for example, masks a weakening picture for real jobs, with more people working more jobs that don’t pay very much.

    And high stock prices make people think that they are richer than they really are – and more willing to spend money.

    For the last 30 years, household net worth has risen about twice as fast as the underlying economy. Stock prices, in other words, are not based on real output.

    And there is still no net gain in household income – despite 110 months of growth (the second-longest expansion in history) – for the entire 21st century.

    As we reported in Monday’s Diary, our colleague David Stockman uncovered that wage growth has kept pace with inflation; no more, no less.

    There are never any sure things in economics. Instead, there are always surprises. And perhaps Mark is right; the surprise will come on the upside.

    We’ll see…

    Pride of Barcelona

    We went to visit the pride of Barcelona yesterday, the Sagrada Família, an extraordinary cathedral designed by the extraordinary architect, Antoni Gaudí.

    image

    A view from inside the Sagrada Família

    Gaudí was a devout Christian. He saw the cathedral as a way to express his profound, and perhaps very original, faith.

    The Sagrada Família is breathtaking. And it shows what you can do when you are daring enough.

    Gaudí began the building in 1882. He kept at it – off and on, sometimes living onsite – for the next 44 years.

    Then, crossing the street, he was struck by a tramway car and died. At that point, people were still not quite sure whether he was a genius or a fool, but they knew he was extraordinary.

    Thousands of them came to the funeral and accompanied the into the crypt of the church he had designed.

    We have done a little “experimental” building ourselves. But we are not worthy so much as to gather the crumbs under Gaudí’s table.

    Every detail of the Sagrada Família, from the doorway to the soaring towers to the windows and altar, is staggeringly new and bold.

    Boldness in architecture is usually a sign of arrogance and conceit. Most often, it is a dismal failure. And for good reason.

    Condensed Wisdom

    It took hundreds of years for the pleasing, familiar shapes of traditional architecture to evolve.

    Arches were developed some 2,500 years ago. Columns maybe 3,000 years ago.

    These, and many of the “classical” shapes that we take for granted, are physical forms of condensed wisdom, information, and .

    They’re like that for a reason – like language and manners – even if we don’t know what the reason is.

    That’s why so many of America’s most recognizable landmarks (the U.S. Supreme Court, the Lincoln Memorial, even the White House) take cues from the architecture of the classical age. It is unlikely that a modern architect is going to improve on them.

    That’s also why almost all the innovation of the 20th century was so ugly and dysfunctional; after World War I, architects consciously rejected the past.

    And when you do that – whether you are rejecting traditional work ethics, economics, religion, marriage, manners, morals, or aesthetics – you risk creating monsters.

    The Russians, for example, rejected the conventions of bourgeois capitalism and created the Soviet Union.

    The Brazilians rejected organic, vernacular architecture, and created their capital city – Brasília.

    Meanwhile, architects the world over – such as those of the Bauhaus school – intentionally stripped their buildings of the ornaments and refinements of the past in order to give them a new, modern look.

    And in economics, to which we will return until we are sick to death of it, classical economics was rejected in favor of claptrap modern theories – especially those of John Maynard Keynes.

    The result? A monstrous mess…

    Gaudí’s work is exceptional. Yes, it looks a little like it escaped from some eccentric’s backyard and has been enlarged 1,000 times.

    But it is breathtakingly original and refreshingly sui generis. We have seen hundreds of churches… but none like the Sagrada Família.

    Regards,

    signature

    Bill

    MARKET INSIGHT: TREASURY YIELDS ON THE MOVE

    By Joe Withrow, of Research, Bonner and Partners

    As Bill reported, the 10-year Treasury yield is on the rise…

    Today’s chart tracks the 10-year Treasury yield from the start of 2013 through today.

    Chart

    As you can see, the 10-year Treasury yield bottomed at 1.4% in July 2016… and has risen to nearly 3% today. That is its highest level in more than four years.

    The yield on the 10-year Treasury note is one of the most watched indicators in finance. That’s because it has a major influence on mortgage rates.

    Also, when yields rise, borrowing costs for businesses rise. That tends to reduce profitability and makes it harder to drive returns for shareholders.

    – Joe Withrow

    -Read more at bonnerandpartners.com-

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  • History is Jammed With Fake News, Too

    24.04.2018 • United StatesComments Off on History is Jammed With Fake News, Too

    Bill Bonner – Bill Bonner’s Diary (United States) –

    BARCELONA – The streets were crowded last night.

    On the main ramblas, so many people were strolling about that we could barely cross the intersection. Many of the women held a single red rose.

    It was the Day of Roses and Books – Sant Jordi’s Day – in the Catalan capital city. Women are given roses to celebrate the slaying of the dragon by Sant Jordi (Saint George) in the 4th century.

    Men are given books coincidentally, to recall the deaths of the two giants of Western letters, William Shakespeare and Miguel de Cervantes, both of whom died on the same day: April 23, 1616.

    Dragon Infestation

    Fake news is our subject today. We open our eyes and see it everywhere.

    Myths and legends – like political slogans, federal budget projections, and declarations of eternal love – are not subject to proof.

    According to legend, the town of Montblanc in Catalonia had a dragon infestation. In order to keep the dragon satisfied, the town fed it one person every day.

    And the person selected on the 23rd of April, 303, was – improbably – the town princess.

    It was on this day that Sant Jordi, a Christian knight, showed up and quickly went to work. He drove his lance into the beast. The dragon was killed, its blood spilled upon the ground. And from the blood-soaked ground grew a red rose.

    The story is probably fake news.

    If the historians are to be believed, the real Saint George was not in Montblanc that day in AD 303.

    Instead, he was in the ancient Greek city of Nicomedia, undergoing the kind of punishment that Donald Trump wants to give drug dealers.

    Saint George offered religion – Christianity, to be specific. And Emperor Diocletian had declared war on Christians. He ordered that all Christian soldiers were to be arrested.

    According to this account, George refused to renounce his religion and his was cut off, making him a martyr to the cause.

    Either a Fool or a Genius

    History is jammed with fake news, too. The bare facts may be reported correctly. But facts lack all sense and meaning unless there is context.

    In addition to the “what,” “where,” and “when,” you need a “why.” And the “why” is almost always so distorted by time, delusion, and wishful thinking that the meaning is more myth than reality.

    Barcelona’s streets – at least in this part of town – are wide with a center strip for pedestrians, protected from the Mediterranean sun by sycamore trees on both sides.

    image

    Sycamore trees shade the pedestrian walkway

    Buildings are handsome 19th or early 20th century constructions, many with elaborate overhanging balconies, often set distinctively on the corners and enclosed in stained glass.

    Architecture is important here; the city is most-often remembered as the home of Antoni Gaudí, whose works are remarkably inventive, clever, and playful.

    But when he began his career, it was not at all clear where he would end up. When he graduated from architecture school, his class director said: “Today, we give this degree to either a fool or a genius. We will see later.”

    By the time he died in 1926, his peers had made up their minds; Gaudí was a genius.

    (Later today, we are going to see his famous cathedral, the Sagrada Família… Stay tuned.)

    Independence Movement

    From our brief inspection, the traditional or vernacular architecture of the city is fascinating in itself. The proportions are handsome. And the details are eye-catching and pleasant.

    The dark wooden shutters, for example, are much more attractive than the white metal ones of Paris.

    But what’s going on here? From balconies all over the city hang red and yellow banners.

    image

    Catalan flags, a symbol of the independence movement

    “Ahh… there’s an independence movement,” explained a friend. “They’re asking for a separate government for Catalonia. They want to break away from Spain.

    “And I know what you’re thinking… that they want freedom and independence so they don’t have to suffer the win-lose deals from Madrid. But you’re wrong. The separatists are like the originarios in Latin America. They want independence so they can impose their own win-lose deals.

    “It’s not about liberty; it’s about control.”

    We wondered what the history books will say.

    Will they say it was a brave struggle for the rights of man, for “self-determination”… and an echo of the Declaration of Independence?

    Or will they say it was just another political bamboozle, where a small bunch of zombies and cronies tried to get control of a government so they could rip off the public?

    It depends how it turns out!

    The victors write the fake news. If you want to be a hero, make sure you win. Otherwise, Gaudí would be a fool, we’d have a Diocletian Day rather than a St. George’s Day, and Barcelona would be celebrating the dragon!

    Regards,

    signature

    Bill

    MARKET INSIGHT: RETAIL IS BACK

    By Joe Withrow, of Research, Bonner & Partners

    Despite being left for dead in 2017, retail is the best-performing industry so far this year…

    That’s the story of today’s chart, which maps the year-to-date stock percentage gains by sector.

    Chart

    As you can see, retail stocks lead the pack with a 14.6% year-to-date return.

    Software stocks come in a distant second at 5.5%… followed by healthcare equipment stocks with a 3.8% return… semiconductor stocks at 2.8%… and tech hardware stocks at 2.2%.

    – Joe Withrow

    -Read more at bonnerandpartners.com-

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  • Bitcoin Will Become the World’s Reserve Currency

    24.04.2018 • United KingdomComments Off on Bitcoin Will Become the World’s Reserve Currency

    Andrew Lockley – Exponential Investor (United Kingdom) –

    Remember, all this week, we’re covering the world of cryptos. Not because crypto markets are over $100bn up from a couple of weeks ago. That’s just lucky timing.

    But because I have a new service out, dedicated to exploring cryptos in more depth than we can in Exponential Investor. If that sounds like something you’d be interested in reading, you can find out all about it here.

    We hear a lot about how cryptos will change the world. But what are they supposed to be changing specifically?

    What is the big impact blockchain and other crypto tech is actually supposed to have, and on what areas of our lives?

    Well, in today’s issue I’m going to list the top five predictions I’ve seen for what this technology will do in the coming months and years.

    And we’re not talking over the very long term here. As I wrote yesterday, with adoption rates’ ever increasing speed, many of these predictions could come true within five to ten years.

    1.Bitcoin will become the world’s reserve currency

    This is what Twitter and Square co-founder Jack Dorsey believes will happen “probably over ten years, but it could go faster.”

    He revealed his views in an interview with The Times on 21 March this year.

    “The world ultimately will have a single currency, the internet will have a single currency. I personally believe that it will be bitcoin,” he told The Times. This would happen “probably over ten years, but it could go faster”.

    Mr Dorsey accepted that bitcoin “does not have the capabilities right now to become an effective currency”.

    “It’s slow and it’s costly, but as more and more people have it, those things go away. There are newer technologies that build off of blockchain and make it more approachable,”

    And we know what those “newer technologies” are. He’s talking about bitcoin’s Lightning Network.

    This is a technology Dorsey and many other big tech names are heavily invested in. It aims to make bitcoin suitable for smaller and much faster payments. It will essentially eliminate most fees and make transactions almost instantaneous.

    Although it’s not without its flaws, it could be a game changer for the biggest crypto out there.

    Could bitcoin really become the world’s reserve currency? I guess we’ll have to wait and see.

    But with tensions high around the world, and with the US’ “trade war” with China, and Iran switching over to euros for its reporting currency, perhaps a more neutral reserve currency make sense.

    I have read more than a few conspiracy theories that this is China’s big plan. Most of the world’s bitcoin mining takes place in China. And if there was ever a push to make bitcoin the world’s reserve currency, China would make a killing, and gain a lot of power.

    2. World trade will be run through blockchain

    If you were reading Exponential Investor back in January, you might remember this prediction from IBM’s general manager of blockchain, Jason Kelley.

    He made it in his presentation at London Blockchain Week.

    He said the traditional supply (or value) chain is owned by intermediaries.

    This is the process the supply chain takes.

    Production > distribution > processing > regulations and compliance > manufacturing > point of sale.

    At every step of the way there is an intermediary taking a cut. Kelley’s vision is that the blockchain will eliminate these intermediaries.

    And he showed us the partnerships IBM is forming with Walmart and Maersk.

    Maersk is the world’s largest shipping company. If any industry can benefit from blockchain technology, it is Maersk. And it knows it.

    As Kelley showed, Maersk projects the savings and efficiency gains blockchain will provide will lead to a 5% increase in world GDP and a 15% in world trade volume.

    Here’s the slide from Kelley’s presentation.

    Slide from Maersk projects the savings and efficiency gains blockchain will provide will lead to a 5% increase in world GDP Slide from Maersk projects the savings and efficiency gains blockchain will provide will lead to a 5% increase in world GDP Source: Harry’s phone camera

    So, as you can see, this prediction is already on its way to coming true. We have some of the world’s biggest companies already testing it out. And the benefits they believe it will provide are massive. A 5% increase in world GDP and a 15% increase in total trade volume.

    3. We will have self-sovereign identities stored on blockchain

    Instead of our identities being stored on centralised systems, we will have control of our own identities. And we will have control of who we share them with.

    Imagine your passport being your iris or fingerprint. With our identities stored on cryptos there would be no need for a centralised database, and no need for a paper document that proves we are who we say we are.

    As you’ve seen in the last few years, passports have been going electronic. But this will be about more than passports. You will be able to store your medical data – blood type, past history, etc – on the blockchain.

    This may not sound that beneficial. But, while I was at the Event Horizon conference last week, the co-founder of TenX gave a presentation about exactly this topic.

    He used to be a trauma surgeon. And he said one of the biggest difficulties they faced was getting people’s medical records. If you’re in a different country or were brought in unconscious with no ID, it’s very hard to know how to treat you.

    Do you know where all your medical data is stored – or how you could give it to a surgeon if you were taken ill in a foreign country?

    Now, using biometric data for security has some very big issues. But that is a problem that is constantly being worked on.

    Solving the problem of identity is one of the main use cases that blockchain has. And there are already number of big players in this area. For example, here’s Microsoft’s take on identity and the blockchain:

    We aspire to a world where the billions of people living today with no reliable ID can finally realize the dreams we all share like educating our children, improving our quality of life, or starting a business.

    To achieve this vision, we believe it is essential for individuals to own and control all elements of their digital identity. Rather than grant broad consent to countless apps and services, and have their identity data spread across numerous providers, individuals need a secure encrypted digital hub where they can store their identity data and easily control access to it.

    Each of us needs a digital identity we own, one which securely and privately stores all elements of our digital identity.  This self-owned identity must be easy to use and give us complete control over how our identity data is accessed and used.

    We know that enabling this kind of self-sovereign digital identity is bigger than any one company or organization. We’re committed to working closely with our customers, partners and the community to unlock the next generation of digital identity-based experiences and we’re excited to partner with so many people in the industry who are making incredible contributions to this space.

    This will go even further than just identity, it will also involve asset ownership. The deeds to your house will be stored on the blockchain.

    In the UK, you might think, why? The system we have is okay as it is. But in many parts of the world, property rights and proving you own something is a massive issue.

    4. Stock and bond markets will be run on Ethereum

    As I have written about before, Ethereum could save bond markets billions by the use of smart contracts.

    If you missed my article on Ethereum and smart bonds, you can read it here.

    But to sum it up: Ethereum smart contracts will make it very easy and secure for companies to issue bonds themselves. This will cut out many of the intermediaries that leech money from both buyers and sellers in the bond market.

    And it will also mean bonds can be traded around the world at any time of the day or night, just as easily as people trade cryptos right now.

    And not only bonds, but the entire stockmarket could – and most likely will someday – be run on Ethereum. You can think of this in a similar way to when stockmarkets went digital. But its impact could be arguably even bigger.

    Brokers will go the way of HMV. And fees will either be eliminated or made completely negligible. It will also open up stockmarket investing to a whole new world of people.

    5. Energy markets will run on crypto

    Given that I spent all of last week at a conference dedicated to this vision, I can safely say, it is on the cards.

    As I wrote last week, there were industry leaders in energy in attendance from all over the world. And the overwhelming message was energy markets are changing. And changing fast.

    We already have Chilean regulators using Ethereum to track, store and secure energy data.

    Here’s what Chile’s energy minister, Susana Jiménez, said about the program earlier this month:

    “We are interested in taking this technology from a conceptual level to a concrete case, understanding that it’s considered to be the most disruptive technology of the last decade by world-class experts, and that it could be part of day-to-day life in the next few years.”

    But it’s not just governments and regulators. I saw presentations from the likes of Shell, the World Energy Council, The Energy Web Foundation, Centrica, MIT and others.

    The message was overwhelmingly that the energy markets are moving in a digital direction, and blockchain is making that move possible. They also believe this move will come about much faster than many realise.

    You see last Friday’s Exponential Investor here for more on this prediction.

    Until next time,

    Harry Hamburg
    Editor, Exponential Investor

    -Read more at www.exponentialinvestor.com-

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  • How Much of Your Wealth is in The Grip of These Gatekeepers?

    24.04.2018 • United KingdomComments Off on How Much of Your Wealth is in The Grip of These Gatekeepers?

    Boaz Shoshan – Capital and Conflict (United Kingdom) –

    Have you been investing in Iranian nuclear technology?

    If you have, I applaud your audacity. Fortune favours the bold, and investing moves don’t get much bolder than trying to profit from Iranian nukes.

    To be clear: I have not been investing in Iranian nuclear tech… but it was interesting to see what happened when some joked that I had.

    A friend of mine recently sent me fifteen quid over PayPal, to settle a small drinking debt. Similar to online bank transfers, PayPal lets you attach a note to the payment.

    My friend was feeling flippant. This is what showed up in my PayPal account.

    Screenshot of Boaz Shoshan's paypal account

    Screenshot of Boaz Shoshan's paypal account

    Payment declined. PayPal doesn’t want to take any chances with some funnelling cash into Iran’s nukes, even if it’s only £15.

    As you can see, I’ve redacted personal information, though these transaction attempts will have probably been picked up in the massive online surveillance sieves of intelligence agencies. (Hopefully Mossad doesn’t take it seriously. For the record, I am healthy and have no intentions of killing myself.)

    My friend tried again, making it quite clear that the money was not to be invested in the aforementioned Iranian nuclear industry.

    Screenshot of Boaz Shoshan paypal account 2

    Screenshot of Boaz Shoshan paypal account 2

    But no dice.

    All joking aside, the situation just goes to show how beholden we are to banks and payment processors, who may have political biases, or are themselves beholden to the state.

    How much of your wealth is in the grip of these gatekeepers? How financially crippled would you be if moving money to and from your accounts was impossible, because you are considered politically unpalatable?

    This happened to WikiLeaks in 2011, when intermediaries such as Visa and MasterCard would no longer accommodate it. In response, it started taking bitcoin donations and accepting bitcoin in the WikiLeaks online shop.

    This has worked out very well for it over the years. It’s made a fortune, while circumventing the financial intermediaries and middlemen who would freeze its finances. But as cryptocurrencies have taken off in popularity, it seems the problems of the old have returned.

    Coinbase, one of the world’s largest cryptocurrency exchanges, has blocked WikiLeaks from using its services.

    This isn’t so much of a threat to WikiLeaks as before, as Coinbase doesn’t hold nearly so much influence in crypto as Visa or MasterCard does in the paper currency world. WikiLeaks can just find a different crypto exchange when it wants to swap its bitcoin for fiat.

    But it’s interesting to see things go full circle, as a currency adopted for its lack of middlemen becomes a victim of its own success…

    In the meantime, the new digital currency world is beginning to look a lot like the old paper money world. I heard the following at a conference last week, from a “cryptocurrency investment banker”:

    “The future is even brighter than it’s been, and when I mention regulation, and things going back to the old world, these are not bad things. Not bad things at all.”

    What was the point of the new world, if it’ll be just the same as the old one?

    I’d love to know your thoughts in the comments below.

    For those interested in “unplugging” their wealth from the financial system, and avoiding the financial gatekeepers altogether, we’re working on a guide for it. Keep an eye out for it in the near future.

    All the best,

    Boaz Shoshan
    Editor, Southbank Investment Research

    -Read more at www.capitalandconflict.com-

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  • Reducing Debt Isn’t a Priority… So What Is?

    23.04.2018 • FranceComments Off on Reducing Debt Isn’t a Priority… So What Is?

    Simone Wapler – La Chronique Agora (France) –

    At the last meeting of the IMF and the World Bank, the United States was criticized for its “trade war” and its protectionist ambitions.

    “If tariffs were to be generalized and increase by 10%, we would everywhere have a significant increase in imported prices and therefore loss of purchasing power. We would then witness a drop in world GDP of at least 2%, “said François Villeroy de Galhau, the president of the Banque de France.

    The game of win-win agreements requires that everyone exchange what they know best to acquire what they do not do well. Tariffs are just a form of tax that affects those who buy imported goods and – like any tax – cuts purchasing power without being a creator of wealth. But to quantify with such precision the effects of protectionism can only leave us breathless with admiration.

    Strange that our omniscient technocrats do not pursue their reasoning: conversely, if we lowered the customs duties, the GDP should increase. They should be able to calculate that too. In France, customs duties range from 3% to 20% for products imported outside the European Union. Why not delete them? It would be too simple ?

    The now well-worn theme of “too much debt”

    The IMF and the World Bank were also debating the hackneyed theme of “too much debt”. We should “take advantage of the good times to reduce debt and lead the reforms,” ​​says Villeroy de Galhau, Governor of the Bank of France, participating in this ball of hypocrites.

    Reducing debt is not at all the priority of welfare states since it is available in seemingly unlimited amount and costs nothing. On the contrary, the monetary and financial system is designed to favor it.

    This brings us back to our brief history of currency, from Sumer to Bitcoin, which began last week.

    Episode 9: After the end of Bretton Woods, the advent of credit

    After the end of the Bretton Woods agreements in 1971, all currencies are floating, without anchoring in the real world. Commodities are traded in dollars. To get oil, you need dollars. Dollars are therefore easily exported and central bankers store them. Of course, they do not store bundles of greenbacks but US treasury bills that yield a little something.

    At the same time, commercial banks collect deposits and are allowed to create credit, on the order of 10 to 30 times their own funds (the money the bank’s shareholders put in the pot).

    We are entering a system whereby “credits make deposits”.

    When a bank grants a loan, the corresponding money is created and will appear as a deposit elsewhere. For example, you buy a property on credit and the price of your property becomes a deposit in the bank of your seller.

    The so-called fractional reserve system allows banks to deposit only a small portion of deposits with the central bank on which it depends.

    Commercial banks receive a license to lend money that does not yet exist. Indeed, for 1 deposit, commercial banks can lend 99. This is called the fractional reserve system.

    This money is lent for private expenses (what your financial adviser calls “your projects”) or investments, or finally public expenses.

    Loan capital does not exist (at 99%), so lenders do not take risks, especially if they lend to states, the same states that granted them their money creation license.

    Lenders in bad shape will be saved by the Central Bank, their state – so you, taxpayer.

    Counterfeiters dubbed by the State

    “In essence, the current monetary creation by the banking system is identical, I do not hesitate to say so to make clear what is really involved, the creation of money by counterfeiters, so precisely condemned by law. Concretely it leads to the same results. The only difference is that those who benefit are different. Maurice Allais, The World Crisis Today, ed. Clément Juglar, 1999

    This system has nothing to do with capitalism. It works with credit and not existing money already.

    Credit is based on two pillars

    • Monetary creation ex nihilo, which is the result of the issuing monopoly of the central bank. It is based on the public debt, the government bonds, whose guarantors are the taxpayers.
    • The system of fractional reserves.

    It is an eminently unstable system that can only support credit growth. Any tightening of private credit in circulation leads to bankruptcies and therefore recessions. Any tightening of public debt leads to a decrease in consumption subsidized by redistribution expenditures.

    Central banks are supposed to regulate the mass of credit by adjusting their key rates.

    Financial crises increasingly frequent

    Financial crises and speculative bubbles succeed one another, always closer and more serious:

    • Japanese crisis
    • Krach of 1987 and crisis of savings banks and savings banks
    • Bankruptcy of speculative fund LTCM in 1998
    • Internet bubble of 2000
    • Crisis of subprime credit in 2008

    Debt growth implies a forced decline in long-term interest rates. Financial zombies must be able to appear viable by paying interest on a debt that they can not repay.

    At each crisis, central banks lower their key rates. They then raise them but without regaining the previous level.

    -Read more at la-chronique-agora.com (French)-

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  • Beware the Myth That Guides US Investments

    23.04.2018 • United KingdomComments Off on Beware the Myth That Guides US Investments

    Nick Hubble – Capital and Conflict (United Kingdom) –

    This issue of Capital & Conflict comes from my friend Akhil Patel. He unpacks one of the favourite arguments of the Austrians. Not the Austrians generally, but the followers of the Austrian School of Economics, like me.

    As you’ll see, it’s easy to interpret historical events to suite our preconceived ideas. Most schools of thought make this mistake. As Akhil puts it, “Do not be seduced by it. Or feel free to be, but do not let it guide your investment decisions.”

    But the real treasure in Akhil’s work is the alternative it presents. Instead of using economic theory or macroeconomic analysis, Akhil begins with an observation: cycles are inherent in the economic system. And therefore predictable.

    Using this idea, subscribers of Cycles, Trends and Forecasts invest to profit from the ups and downs of the various cycles fluctuating through markets around the world.

    If you agree with his ideas, there’s no denying they’re a powerful ally in the investment world. So let’s see if Akhil can convince you..

    Until next time,

    Nick Hubble
    Capital & Conflict

    Beware the fatal conceit of the Austrians

    Akhil Patel, Cycles, Trends and Forecasts

    Few people today know or remember the depression that took place in the US between 1920 and 1921. The glamour and excesses of the Roaring Twenties has obscured it and the Great Depression eclipsed it in both length and legend.

    But it’s important you understand what happened almost a century ago.

    In the wake of the high inflation – and, for the US, the booming business – of the First World War, the recently created Federal Reserve set about bringing prices under control. Sean Keyes, writing for MoneyWeek magazine a few years ago, described it thus:

    The various Federal Reserve banks raised interest rates by 244 basis points over the course of eight months, with rates peaking at 7% in June 1920.

    The Fed’s aggressive tightening seems to have yanked the economy to a halt. Output peaked in January 1920 when the Fed raised rates by 1.25% – still the sharpest single rise in the entire history of the system. Employment and output fell slowly at first, then collapsed in the summer after the final rate rise in June 1920.

    The word collapse is overused – but it’s entirely appropriate in this case. Production dropped by a third in just over a year. Wholesale prices more than halved. Indeed, the price collapse was probably the biggest the US has seen in its entire history. And the fall in output was second only to the Great Depression.

    The severe deflation meant that interest rates were – in real terms – very high and made the servicing of debts crippling. Farmers and businessmen who had expanded to cash in on high prices and the commodities boom of the 1910s went bankrupt as prices and demand fell.

    The fallacy of a common argument

    Despite Keyes’s observation that the fall in output was second only to the Great Depression in American history, the US recovered rapidly. And it did so with minimal government intervention. The 1921 recovery also did not involve any deliberate action from the Fed other than bringing interest rates down again.

    These points were included in a recent book by Jim Grant (of Grant’s Interest Rate Observer fame): The Forgotten Depression: 1921, the Crash That Cured Itself. Other “Austrian” economists (if you’re interested in the development of economic thought, you can read a good overview of their approach here) and analysts raise the same point. They view any government intervention as interfering and distorting the “natural” market.

    But this is mostly an ideological argument which is not grounded (I use this pun deliberately) in the real world. The Austrians point to what happened in 1920-21 as the appropriate response to the 2008 crisis, instead of the government bailouts and Fed money printing that we actually got.

    But this analogy is false. Do not be seduced by it. Or feel free to be, but do not let it guide your investment decisions.

    You cannot compare the 1921 recession with the 2008 version (or the Great Depression of the 1930s). This is because the downturn of 1921 did not involve land values collapsing, and by extension the banks. What happened in 1920–21 is actually just like the downturn of 2002 in the US and the one we anticipate for the end of this decade or early part of next. In other words, the mid-cycle slowdown of the longer-term real estate cycle.

    Hence the recovery after 1921 was much more likely to begin without requiring government assistance programmes, such as we saw after 2008, and without the Fed having to intervene as well (other than to reverse interest rate policy).

    Why is this important?

    I am not telling you this to score points or to lambast anyone’s deeply held beliefs about the monetary system.

    The problem with ideology is that it is used to create seductive stories and explanations and then send you in certain directions with respect to decisions about your wealth.

    Here is an example of the sort of argument that can be concocted to explain what has happened in recent years:

    • The Federal Reserve or Bank of England should not have intervened. Governments should have severely reduced the size of their budgets in response to the recession. They should have ignored the lessons of the Great Depression.
    • Rather than allow the rate of savings to regulate interest rates they messed with it by printing money – trillions of pounds and dollars. In doing so they broke the monetary system.
    • All of this “state” created money distorts the allocation of capital in the economy.
    • Businesses feel that there is more money in the economy than there actually is (money that represents savings) and therefore have allocated capital to investment to serve demand that is not there. The result? A massive programme of “mal-investments” which will come back to haunt them in the coming crash.
    • Then here the story diverges. For some, market investors have been blind to these problems (they haven’t read their Austrian economics textbooks) and have poured money into the stock market creating a massive bubble which will soon pop. High stock valuations support this view.
    • The alternative story is that actually investors have seen through this and this is reflected in the fact most markets have gone nowhere over the last two decades. Take the FTSE 100, which is currently where it was in January 2000: 18 years and zero returns. Over the same period, the price of gold has quintupled. This means that the market is in fact wise to the scale at which capital has been misallocated and has delivered its verdict based upon the relative performance of these two assets.

    Whichever version of the latter part of the story you believe, the investment advice is the same: you should be in cash or safe haven assets that store value – such as gold. Because the crash is coming – it has been coming for years in fact – and you need to be prepared.

    Seductive isn’t it?

    Let’s leave aside the fact that this view of money creation is wrong (I invite you to read my primer on this subject from last year – The secret life of banks). Let’s note in passing the deliberate selection of dates to show the relative outperformance of gold compared to the FTSE (the top of the dot com bubble vs. the bottom of the commodities cycle in 2000).

    My key contention here is that understanding the land market will help you see the movement of the economy much better. Austrian economists, or any other economists for that matter, do not incorporate land, or the economic rent, into their models.

    You know, however, that recovery from a land-induced bust requires action from the central bank. There is simply no way around it.

    And if you know your history, you’ll understand that the recovery from a land bust takes time to happen: on average four years from the prior cyclical peak. And that once it does, the economic expansion will be sustained until the land speculation once again overwhelms other economic behaviour.

    This pattern goes in cycles. It’s a long cycle and it happens over the course of years, not months. Once you know it, taking advantage of all the volatility will become easier to do.

    You can also come to see which economic arguments are flawed and invest appropriately. For example, since 2009 until late 2016 I was positioned for a deflationary environment. During that same time many “Austrian” investors bought gold and other inflation hedges in response to the money creation from the central banks because they expected hyperinflation. And over that same period, the outperformance of the FTSE relative to gold has been enormous.

    The time for protecting yourself from inflation is starting to arrive, right on cue. The past few years of waiting for it were wasted, I am afraid. Here’s what they don’t understand…

    The US Fed needed to print more

    The refrain over the past several years, since the Fed “QE” I, II and III, has generally been: “Never before has so much money and so much credit been created so quickly. It’s going to sink the dollar, ruin the US and cause economic mayhem, everywhere.”

    But is this actually true: That so much money and credit was created so quickly?

    Not according to Steve H Hanke, professor of Applied Economics at the Johns Hopkins University in Baltimore (he is also one of the very few economists who understands the land dimension and can spot the cyclical repeat). He had this to say (in 2015):

    Even though the Fed has been pumping out State Money at a super-high rate since the crisis of 2009, it hasn’t been enough to offset the anemic supply of money produced by banks – Bank Money. Even after six years of pumping, State Money still only accounts for 21 percent

    of the total money supply broadly measured. In consequence, the Divisia M4 money supply measure is growing on a year-over-year basis at a very low rate of only 1.7 percent.

    You can read his entire piece here, and I suggest you do.

    In fact, you could say the Fed did not actually print enough money. Banks were being forced to devote more of their balance sheets to holding more securities (in case of another bank run) instead of lending it out.

    In other words, all the money printing that took place did not make up for all the money destroyed in the downturn. We cannot emphasise this point enough. The Fed printing money is NOT the problem: the collapse of the money supply, caused by the credit (created against land values for the most part) being wiped out in the downturn and not replaced by new bank lending, was.

    The situation was worse in Europe, as Professor Hanke showed. This is why the eurozone took much longer to recover than the US or the UK.

    This situation has now come to an end, as it does every real estate cycle, as interest rates are lifted back to “normal”. This is around 8 to 9 o’clock on our property clock.

    Money and credit do matter. But land value matters even more.

    The alternative to seductive stories

    Back to why this is important for your investments. Let’s take a look at the FTSE 100 since 2000. As you can see, the dashed line shows that the index is currently where it was at the peak in 2000, at around 7,000.

    Remember, if you think that central banks have broken the monetary system, you’re going to be looking at this chart, at the fact that the FTSE has gone “nowhere” for two decades, and see weakness; possibly preparing for it to go much lower, but certainly to underperform other assets such as gold.

    FTSE evolution in the 21st centuryFTSE evolution in the 21st centurySource: Optuma

    Since 2000, the index approached the dashed line at the real estate cycle peak in 2007; it then briefly broke through in 2015, before doing so decisively in 2017.

    Here is what you need to know about this chart.

    Markets butting up against highs over a long period of time are rare events. And when they break up they run for years and years. So market history tells us.

    Let’s take a look at the Dow Jones between 1930 and 1950. In 1950 the Dow was at around 213, which was where it had been in 1930. Then it broke through and never looked back.

    Dow Jones evolution from 1930s to 1960sDow Jones evolution from 1930s to 1960sSource: Optuma

    It ran and ran. It reached a peak at around 1000 in 1966: two decades of going nowhere followed by a 500% gain in around 16 years.

    W.D. Gann said this, in his Truth of the Stock Tape, about stocks that test highs over a number of years (emphasis added):

    When stocks establish certain levels of accumulation or distribution over a longer number of months or years and then cross them it is almost a sure sign that they are going to new high or low levels before they meet with resistance again…

    When a stock advances…into new territory or to prices which it has not reached for months or years, it shows that the force or driving power is working in that direction. It is the same principle as any other force which has been restrained and breaks out. Water may be held back by a dam, but if it breaks through the dam, you would know that it would continue downward until it reached another dam, or some obstruction or resistance which would stop it. Therefore it is important to watch old levels of stocks. The longer the time that elapses between the breaking into new territory, the greater the move you can expect…

    Following the peak of 1000 around 1966, the Dow stalled at this level for many years. It touched this level in 1969, 1973, 1976/77 and 1980. Each time it reached those highs but failed to break through. In late 1979, BusinessWeek magazine ran an issue with the title “The Death of Equities”, so gloomy was the outlook then.

    But after 16 years of going nowhere, the Dow finally broke through 1,000 in 1982.

    Dow Jones evolution from 1960s to 1980sDow Jones evolution from 1960s to 1980sSource: Optuma

    After doing so it ran up for another 18 years, before peaking at around 11,000 in 2000. 16 years of going nowhere and then 18 years delivering a 1,100% gain.

    Are you starting to see a pattern?

    In my view, the conclusion you should be drawing from the chart of the FTSE is exactly the opposite to the one I paraphrased earlier.

    Be prepared for the FTSE to go much higher. Much much higher. Obviously it will not be all in a straight line and there will be volatility along the way (as in past examples of market breakouts). During that period we will have to contend with the mid-cycle slowdown and perhaps the peak of the real estate cycle.

    Incidentally, the market ructions of the past couple of months have brought prices back down to previous highs. If these hold, that is a strong set-up. And, if you’re interested in time cycles, note that this was exactly 180 months from the market lows in March 2003 (for an introduction to the idea of time cycles, and the significance of this time count, please review this newsletter).

    So now you have both a price point of support and a time point of support for this set-up. I will discuss both of these points in more detail in future newsletters.

    I am sometimes asked: what if I am wrong about cycles and these patterns? That’s a big question. I will be the first to admit that it could well happen. But what this type of analysis throws up are very clear time and price points at which you will know this definitively and you can respond accordingly.

    I want you to be wary of ideology masquerading as investment strategy. All you need to do is to understand the land cycle and learn your market history.

    And the rest will take care of itself.

    Best wishes,


    Akhil Patel
    Editor, Cycles, Trends and Forecasts

    -Read more at www.capitalandconflict.com-

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  • Trump’s “Roaring Back” Delusions Debunked

    23.04.2018 • United StatesComments Off on Trump’s “Roaring Back” Delusions Debunked

    Bill Bonner – Bill Bonner’s Diary (United States) –

    BARCELONA – This just in… from our man in Argentina…

    I stopped in Cafayate for lunch… In the square were some students from different schools celebrating “El día del aborigen Americano” [Day of the original American] as you can see in the picture.

    The teachers’ speeches were depressing… “The land is ours… We belong to the land… We have the right to the land… ” etc. Poor students. What can we expect from them? The lazy ones will probably claim to be originarios when they grow up and make their living [on welfare]…

    image

    Students assemble during El día del aborigen Americano

    Every’s got an angle. From our correspondent in Los Angeles, Matt Gordon, comes word of a new hustle:

    Here in Los Angeles County, according to something called the Los Angeles Homeless Services Authority, there’s now a homeless population of precisely 57,794. For perspective, Chavez Ravine (i.e., Dodger Stadium), has a capacity of 56,000.

    This army of indigents, roaming about the LA LA land paradise, has become a significant embarrassment for local leaders. Haphazard urban campsites litter the bank tops of the colossal, concrete Los Angeles River Channel between Downtown Los Angeles and Downtown Long Beach. The massive collection of tents and makeshift shelters has become too much to ignore.

    A Novel Pilot Program

    Matt continues…

    Hence, the clever folks at the LA Community Development Commission have launched a pilot program to pay homeowners to construct backyard dwelling units to house the homeless.

    Loans of $75,000 are being granted for constructing a new backyard unit for the purpose of housing vagrants. There’s even a design competition for model secondary dwelling units. What’s more, loan interest stops accruing after five years in the program, and the loan is forgiven after 10 years.

    We can imagine how that will turn out. A lot of “vagrant” adult children and widowed mothers-in-law will end up in backyard apartments, paid for by the taxpayers.

    But that’s the way government always works. The few exploit the many.

    Roaring Back

    Matt goes on to wonder how come there are so many homeless people in LA when the economy is doing so well.

    After the second-longest expansion ever… “more than full employment”… inflation under 2%… stocks near record highs… and a 400% increase in the S&P 500…

    …shouldn’t everyone be rich?

    And from the White House we hear that not only is the economy great… it’s getting better! Donald J. Trump:

    …America is strong and roaring back. Paychecks are climbing. Tax rates are going down. Businesses are investing in our great country. And most important, the American people are winning.

    It really seems to be the best of times and the worst of times. Or… is this “best of times” story a form of fake news?

    Colleague and budget advisor under President Reagan, David Stockman, has done a superb job of sorting through the data.

    He found no evidence that “America… is roaring back” or that “paychecks are climbing”… or that “businesses are investing” or that the “American people are winning.”

    Instead, he found:

    Paychecks are keeping pace with inflation, nothing more. Just as they did during the Obama years.

    Real business investment has been on a downward trend for at least the last 7 years. That trend is still in place.

    As a result, labor productivity continues to decline, too… averaging only half the rate of its historic average.

    There has been no pickup in employment, either. Looking at the hours worked, the rate of increase is slightly weaker than it was under Obama.

    Which leaves the American people not winning at all. They have only been able to continue spending by taking a half-billion dollars out of their savings… leaving them deeper in debt and more vulnerable to a downturn than ever before.

    And now, these losers are losing even more… because the feds are loading even more debt on their backs… $1 trillion/year in deficits (two and a half times more than GDP growth).

    In other words, expect more favelas – makeshift slums – in America.

    The strength of the U.S. economy is fake news. But in public policy, fake news is the only kind of news there is…

    More to come…

    Regards,

    signature

    Bill

    MARKET INSIGHT: CRUDE ON THE RISE

    By Joe Withrow, of Research, Bonner & Partners

    U.S. crude oil continues to rise…

    Today’s chart tracks the price of West Texas Intermediate (WTI) crude oil – the U.S. benchmark – from the start of 2015 through today.

    Chart

    As you can see, U.S. crude oil climbed 160% since bottoming in February 2016.

    At over $68 per barrel, oil is now trading at its highest level in more than three years.

    – Joe Withrow

    -Read more at bonnerandpartners.com-

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  • How to Benefit Directly from the Speedy Crypto Adoption

    23.04.2018 • United KingdomComments Off on How to Benefit Directly from the Speedy Crypto Adoption

    Harry Hamburg – Exponential Investor (United Kingdom) –

    This week we’ll be taking a “deep dive” into the world of crypto.

    If you’re a regular reader, you’ll know just how world-changing I believe this technology is.

    And if you’d like to know more about what I believe are the best cryptos out there right now, and how you can invest in them, you should check out my new service Frontier Tech Investor: Crypto Wire.

    As an Exponential Investor reader, you I’ve arranged for you to get a 71% saving off the regular price with this code: CWSAVING.

    In Frontier Tech Investor: Crypto Wire I cover crypto topics in much more depth than I have space to do in Exponential Investor.

    And I also look into more specific cryptos and weigh them up using a unique ranking system. If you want to know more about it, click here now.

    Of course, I’ll still be covering cryptos in Exponential Investor, but if you want a more in-depth look and a pure crypto focus, as well as exclusive crypto rankings, you can click here to claim your 71% discount on Frontier Tech Investor: Crypto Wire.

    Tech adoption is speeding up

    I’m going to show you a chart from Our World in Data. If you haven’t heard of it, here’s its own explanation of what it does.

    Our World in Data is an online publication that shows how living conditions are changing. The aim is to give a global overview and to show changes over the very long run, so that we can see where we are coming from and where we are today. We need to understand why living conditions improved so that we can seek more of what works.

    Basically it collates loads of historical data about all aspects of life, all over the world, and makes it easy to understand.

    It’s a great website to have a play on, if you want to ever get to the truth behind a lot of scaremongering news stories.

    But anyway, here’s the chart:

    This chart shows how long new technology takes to get adopted.

    What may not be clear at first is that as time goes on, new technology is getting adopted at a faster and faster rate.

    If we zoom in on the more recent technologies that trend is much easier to see:

    As you can see, the lines are getting steeper and steeper with each new technology.

    Why tech adoption is speeding up

    This then brings up two questions (at least it did for me):

    1. Why is tech adoption speeding up?
    2. What does this mean for future tech trends?

    The first question has a simple answer. New technology no longer has to create its own infrastructure.

    Think about the amount of engineering needed to lay water pipes, or electricity pylons, or radio antennas. In the past, new technology also had to create entirely new infrastructure to support its use.

    Later technology just adapted infrastructure that was already in place. Take internet use, for example. The infrastructure it needed was already in place. It simply piggybacked off existing phone lines.

    Telephones, by comparison, had a much harder time of it.

    But there is also another aspect to increased adoption speed: connectivity.

    Today, if someone tries out a new technology and it improves their lives, you can bet all their friends will know about it within minutes. And not just their friends that live close by, but their friends all over the world.

    Look at the line on that chart for tablets. It’s almost vertical.

    This instant connectivity we now have is the reason we can get the latest TV shows within 24 hours of US viewers. The companies know that if they don’t give us them, we’ll just get them through other means – torrents, streaming, using VNPs to change our location, etc.

    I’m re-watching all of Breaking Bad right now on Netflix. I remember when it first aired, I used to download it through torrents because it wouldn’t air on UK TV for months. By the last season it was shown on UK TV the day after it aired in the US.

    It’s exactly the same with Game of Thrones, and other big TV releases.

    What this means

    The fact that all this adoption is speeding up means when a new, belter technology emerges, you can bet it will make it big extremely fast. How fast? Take a look at this chart:

    The amount of money flowing into these industries throughout their adoption was huge. And they all have one thing in common: it was very hard for the average person to invest in them directly.

    It’s not like you could just invest in “radio” or “television” or “electricity”. Had you been able to, you could have made a fortune.

    But the world doesn’t work like that. Or, at least, it didn’t used to.

    The world is very different now

    Well, cryptos change that paradigm.

    Cryptos are the first world-changing technology that you can directly invest in yourself.

    You can own a piece of the actual technology. You can literally own bitcoin, or Ethereum or IOTA.

    Sure, back in the day you could invest in Microsoft or Apple or Sony. But it’s not like you would actually own a piece of every computer, iPhone or TV they produced.

    With cryptos, you do. If the technology succeeds – and we’ll be covering more on that in the coming days – you can literally own a small part of it.

    And that small part, as I’m sure you’re aware could soon be worth a whole lot of money.

    You’ve seen how fast new technologies get adopted “nowadays”. Well, crypto is next on that list. This year it has reached the point where it can be used in real-world application. And more importantly, it is being. Again, I’ll cover more about that this week.

    But the key takeaways here are:

    Crypto will be adopted faster than almost anyone realises.

    And by owning crypto you can directly financially benefit from this adoption.

    If you want to find out how you can do that for yourself, remember to check out Frontier Tech Investor: Crypto Wire. When you join you’ll get everything you need to start investing in crypto yourself – and I do mean everything, have a look here to see what I mean.

    And don’t forget, as an Exponential Investor reader, you can claim a 71% discount by using the code: CWSAVING.

    Until tomorrow,

    Harry Hamburg
    Editor, Exponential Investor

    Related Articles:

    -Read more at www.exponentialinvestor.com-

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  • America’s Plagued and Trump Can’t Cure It

    20.04.2018 • United StatesComments Off on America’s Plagued and Trump Can’t Cure It

    Bill Bonner – Bill Bonner’s Diary (United States) –

    ON THE CELTIC SEA – We drove up to Cherbourg yesterday, boarded a ferry, and are now cruising towards Ireland. The trip takes nearly an entire day, but the wifi works onboard… so we were able to stay in contact.

    image

    Harbor at Cherbourg

    image

    Aboard the Oscar Wilde

    It can be a miserable crossing for someone who gets seasick easily. But the sky was sunny when we got on board, and the trip has been smooth. We have only a couple more hours to go; we are approaching the Irish coast already.

    The ship is full of children – French teenagers who are going to Ireland. There must be at least a hundred of them. They are everywhere… and they are always in motion.

    We sat in the bar this morning, drinking a cup of coffee while watching them go by. One way… then the other. In twos and threes. Some walking. Some running.

    Where were they going? We are on a ship; there is nowhere to go. But they couldn’t sit still. Instead, they wandered up and down, round and round… talking, laughing.

    We pitied their poor chaperones, who tried to keep them quiet and under control. Whoever invented school trips must have done so to torture them.

    Below… we follow up on how the feds are bankrupting America… and why a stock market crash, a bear market in bonds, and a depression are now probably inevitable.

    Second-Place Debt

    The International Monetary Fund (IMF) now predicts that the U.S. government debt load will be worse than Italy’s by 2023. This will put America in second place, just behind Japan, in the race to go broke. It is expected to have a debt/GDP ratio of 117%.

    This IMF forecast assumes that things will go well. That is, it assumes that there will be no shocks or unexpected developments. But we have already gone a long time without a recession – 109 months. The record is 119 months.

    Most likely, a recession will begin… fairly soon. Then, all the estimates will be tossed aside and replaced with much worse numbers.

    Instead of a $30 trillion debt in 2028, for example, the debt will explode to $40 trillion… or even to $56 trillion, as one of our Dear Readers forecasts.

    But even as things now stand, extrapolating only budget projections and visible trends, the federal government is already programmed for bankruptcy. Yes, it can “print” money to cover its debts, but this is just bankruptcy masquerading as inflation.

    That’s what happens when receipts habitually fail to meet outlays and debt rises faster than the economy that supports it.

    Some will want to blame Donald J. Trump immediately. But let’s not rush to judgment. The disease was well advanced long before Mr. Trump appeared at the craps game with his MAGA cap.

    The desire to balance the budget is described as a “conservative” attitude. But “conservativism” only makes sense in a world of scarcity. If you’re going to live forever anyway… why bother with an estate plan?

    We try to save time because we know our time is limited. We try to save money because we know it doesn’t grow on trees. But since 1987, when Alan Greenspan rescued the stock market from a correction, the Fed has appeared to have an especially green thumb.

    Even at today’s Fed Funds rate of 1.69%, the real rate of interest is less than zero. Because consumer prices are rising at about 2% per year. The Fed’s money is free (to member banks, of course).

    Even at nominal yields, there is still some $7 trillion in bonds worldwide trading below zero. For nearly three decades, this new money has seemed to be unlimited.

    Reality TV White House

    Together, central banks have increased their holdings by $17 trillion over the last 10 years. That’s money that didn’t exist before.

    This gush of liquidity did remarkable things to the economy. Chiefly, it shifted the focus from making things and earning money… to consuming things and speculating with credit.

    The price of financial assets rose, while the price of the working man’s time stayed about the same. The resulting “wealth effect” made it seem benign.

    But it was malignant. And it gave the feds the wrong idea – that deficits really don’t matter because there is an almost unlimited amount of money for them to borrow.

    The illness was entering its terminal phase even before Donald J. Trump was elected. But his ascendance seemed to give some people hope.

    He promised to “drain the swamp.” In an era of mealy mouthed, double-talking politicians, Mr. Trump sounded direct… almost honest. Maybe he had a cure!

    The difference turned out to be mostly aesthetic. Instead of normal TV programming… we got Mr. Trump’s reality TV, in which things are staged to look as though they aren’t staged.

    And instead of Deep State insiders calling the shots, we now have an administration that pretends to be fighting the elite, but is even more enthralled to the insiders than its predecessors, largely because it has no idea what else to do.

    And instead of a budget deficit of $700 billion as scheduled by Obama-era programs, we now have an additional $300 billion, giving us a projected budget deficit of $1 trillion, under DJT’s leadership.

    The Washington Post elaborates:

    By 2022, the U.S. government is projected to spend almost as much money on interest payments for its massive debt as it will on the Pentagon, more than $600 billion every year.

    The spiraling expense underscores a frightening reality in Washington: President Trump and Congress have not only massively expanded the U.S. government’s debt, they have broken free of multiple guardrails intended to keep budgets balanced, freeing future lawmakers to further expand the yawning gap between what the government takes in and what it spends.

    Now, this borrowing binge appears impossible to reverse…

    All the hoopla and razzmatazz about trade deals, Russian meddling, Syrian bombing, and porn stars may not amount to a hill of beans.

    But $300 billion is a lot of money. That’s on top of the $700 billion already authorized. And it comes as the Fed tries to reverse course.

    Instead of enabling the feds’ fantasies by buying their bonds, for the first time in 30 years, the Fed is selling bonds.

    The combination of frauds and foolishness undoubtedly deserves an “extreme warning.” It may or may not be imminent. But it is surely inevitable.

    Disaster to follow.

    Regards,

    signature

    Bill

    P.S. You may have heard of our estate in Nicaragua – Rancho Santana. It’s nestled up against some of the most beautiful Pacific coastlines in all Latin America. We bought the property more than 20 years ago. Back then, the government wasn’t very accommodating to private property rights… or foreigners. But the people were warm, and the views spectacular.

    I mention this because there’s been a development down at Rancho. Rather than hear it from us, we’ll let our daughter Maria tell you the whole story.

    MARKET INSIGHT: CHINESE STOCKS SINK

    By Joe Withrow, of Research, Bonner & Partners

    U.S. stocks have gotten off to a rough start this year… partly due to trade war fears. Despite its recent rebound, the S&P 500 is still 6% off its January high.

    But for some perspective, Chinese stocks have fared even worse in 2018.

    Today’s chart follows the Shanghai Composite Index – which tracks all stocks trading on the Shanghai Stock Exchange – from the start of 2017 through today.

    Chart

    As you can see, Chinese stocks have plunged 14% from their January high. That’s more than double the S&P’s fall during the same time.

    – Joe Withrow

    -Read more at bonnerandpartners.com-

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  • U.S. Missileers Stand Ready as the Russian Nuclear Arsenal Grows

    20.04.2018 • United KingdomComments Off on U.S. Missileers Stand Ready as the Russian Nuclear Arsenal Grows

    Boaz Shoshan – Capital and Conflict (United Kingdom) –

    Have you heard of the Kanyon? It’s a new addition to Russia’s nuclear arsenal. It’s an underwater drone, designed to be fired from a submarine like a torpedo.

    It can race across the ocean for days, thousands of feet below the surface… before reaching its target and triggering a nuclear tsunami.

    Kanyon was the CIA’s codename for it. In Russia, it was named the Poseidon – after a public vote! (If “Boaty McBoatface” is any guide, I sure hope our nuclear deterrent doesn’t get renamed by the public.)

    The Kanyon sounds straight out of a Hollywood film – the lengthy wait before it reaches its target provides plenty of time for character development and for the hero to save the day.

    Technology makes truth stranger than fiction – especially so when it comes to nuclear weapons and drones. The title of this email is taken from a patch worn by the US “Missileers”, who stand ready around the clock to launch the US’ nukes.

    Enforcement of uniform standards is notoriously slack for the Missileers. Should a nuclear war break out, they’ll probably be wearing “snuggies and slippers” as they reign death on an untold scale across the planet.

    Strange. And technology continues to make the world stranger. Just earlier this month a drone was used to fly a monstrance across a church into the hands of a Catholic priest, in the middle of a service.

    Meanwhile, the US military wants its drones taught to find, identify and kill people – all on their lonesome, without humans in the loop. The US Department of Defence – who I mentioned last week is vastly expanding its drone arsenal – is requesting that companies with artificial intelligence capabilities partner with it to develop the nefarious system.

    From the brief (emphasis mine):

    OBJECTIVE: Develop a system that can be integrated and deployed in a class 1 or class 2 Unmanned Aerial System (UAS) to automatically Detect, Recognize, Classify, Identify (DRCI) and target personnel and ground platforms or other targets of interest. The system should implement learning algorithms that provide operational flexibility by allowing the target set and DRCI taxonomy to be quickly adjusted and to operate in different environments. 

    The brief goes on to mention the potential use of these drones in a “homeland security” environment. What could possibly go wrong?

    Interestingly, those who write the learning algorithms that give the American drones the “intelligence” the military would like, stand to become high value targets in the event of a war.

    From The Conversation:

    The legal implications of these developments are already becoming evident. Under current international humanitarian law, “dual-use” facilities – those which develop products for both civilian and military application – can be attacked in the right circumstances. For example, in the 1999 Kosovo War, the Pancevo oil refinery was attacked because it could fuel Yugoslav tanks as well as fuel civilian cars.

    With an autonomous drone weapon system, certain lines of computer code would almost certainly be classed as dual-use. Companies like Google, its employees or its systems, could become liable to attack from an enemy state. For example, if Google’s Project Maven image recognition AI software is incorporated into an American military autonomous drone, Google could find itself implicated in the drone “killing” business, as might every other civilian contributor to such lethal autonomous systems.

    Proxy wars, of the kind we’re now involved in with Syria, become even more abstract with such weapons. Consider autonomous drones endlessly roaming and refuelling themselves over contested areas, automatically destroying targets they have learned are enemies, and enemy drones that are doing the same thing.

    Private military contractors are politically palatable to use in war as their deaths are not recorded as official military casualties – autonomous drones will be politically delicious.

    Technology bends reality, and not necessarily for the better. But like it or not, it will be bent. And investors a of the curve stand to make great gains from it. Our tech specialist Sam Volkering has already recommended one drone company poised to soar into this strangeness to his readers, and explained in his most recent issue of Revolutionary Tech Investor where he thinks the industry will next.

    Curiously, as we progress into the future the past becomes strange too: it’s become hard to imagine a world without phones or the internet.

    Until next time,

    Boaz Shoshan
    Editor, Southbank Investment Research

    -Read more at www.capitalandconflict.com-

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  • India’s Short on Cash… Again

    20.04.2018 • IndiaComments Off on India’s Short on Cash… Again

    Vivek Kaul – Vivek Kaul’s Diary (India) –

    There is a currency shortage in large parts of the country with the ATMs running dry, even before the wells could run dry this summer. Various reasons have been offered for this, but primarily this is a supply problem.

    This basically means that there isn’t as much currency (or cash) going around in the economy, as the economy needs.

    The growth in currency in circulation is closely linked to the growth in gross domestic product (GDP, a measure of economic growth). Take a look at Figure 1, which basically plots the growth in currency in circulation along with nominal GDP growth (i.e. GDP growth which hasn’t been adjusted for inflation), over a two-year period, over the years. We have taken two-year periods into account, primarily to adjust for demonetisation, which had led to a massive fall in currency in circulation.

    Figure 1:

    What does Figure 1 tell us? It tells us that during the two-year periods between 2012 and 2014, and 2014 and 2016, the currency in circulation grew by over 20%, as did the nominal GDP.

    This changed between 2016 and 2018, when the currency in circulation grew by just 10%, whereas the nominal GDP grew by 21.7%. Hence, the growth in currency in circulation has slowed down substantially.

     

    And this is basically what has created the shortage of currency or cash, in large parts of the country. There simply isn’t enough currency or cash going around.

    Let’s try and estimate the gap. The currency in circulation as of March 31, 2016 was at Rs 16.63 lakh crore. This increased by 10% over a period of two years, and as of March 31, 2018, stood at 18.29 lakh crore.

    But as we showed earlier, this increase is an anomaly and is too low, compared to the economic growth during the same period. Now let’s say, demonetisation hadn’t happened and the currency in circulation had grown at the kind of pace, as it used to before.

    Let’s say this growth was 25% (an average of the growth for the previous periods). At 25%, the currency in circulation as on March 31,2018, should have been around Rs 20.8 lakh crore. Of course, some part of this currency in circulation would have been replaced by digital transactions. The State Bank of India in a report points out: “The shift to digital modes could be at least Rs 1.2 lakh crore.”

    This basically means that the currency in circulation as of March 31, 2018, should have been at Rs 19.6 lakh crore (Rs 20.8 lakh crore – Rs 1.2 lakh crore). It is currently at Rs 18.29 lakh crore. This means a gap of around Rs 1.3 lakh crore.

    If we assume a more conservative growth of 20%, then currency in circulation should have been around Rs 18.8 lakh crore, or Rs 50,000 crore more than it currently is.

    While, the currency in circulation number can change depending on the assumptions we make, the broader point is that there is a shortage of currency. The government has also admitted to it. As the economic affairs secretary SC Garg put it: “We print about 500 crore of Rs 500 notes per day. We have taken steps to raise this production 5 times. In next couple of days, we’ll have supply of about 2500 crore of Rs 500 notes per day. In a month, supply would be about Rs 70000-75000 crore.”

    Actions speak louder than words. And this is the government admitting to the fact that there is a shortage of currency, and they are looking to increase the supply. Also, this is yet another indicator of the fact of how demonetisation cost this country dear and continues to create problems, despite its ill-effects coming down. If the Modi government hadn’t demonetised Rs 500 and Rs 1,000 notes, in November 2016, the current shortage of currency would have never happened.

    Another theory being offered is that elections in Karnataka scheduled on May 12, 2018, have also played their role in the shortage. Data shows that the currency in circulation tends to increase much faster, when elections (state assemblies or Lok Sabha) are around the corner.

    The trouble is that elections happen all the time, but ATMs don’t run dry, as they have during April 2018. So how do we explain this situation?

    In the week ending April 13, 2018, the currency in circulation has gone up by around 1.8% or Rs 33,000 crore. This is clearly on the higher side. In the past, similar jumps have happed around election time, which basically means that people (or should we say politicians) hoard on to money in order to be able to spend it before elections.

    Clearly, something of that sort is happening in Karnataka as well, given the historical evidence. Past evidence also shows that such hoarding happens in the states bordering the state where elections are scheduled.

    Over and above this, currency shortages have been on in a few states for a while now. Take the state of Telangana. On a recent visit to Hyderabad (in early April) we were told that the state had been facing a cash shortage for a couple of months.

    In fact, MPs had even raised this question in Parliament, asking the government, if it was aware that large number of ATMs in the states of Telangana and Andhra Pradesh, had been running out of cash. This question was answered on March 18, 2018. (Here is the link to the government’s answer).

    The government in its reply said that the RBI had supplied Rs 51,523 crore to its Hyderabad office, between April 2017 and February 2018, which was the highest in the country. Clearly it wasn’t enough.

    The feeling we got when we were in Hyderabad was that people were generally worried about the money they had in the banks. This was aggravated by the Nirav Modi episode, which brought to the fore, the mess that public sector banks are in and all the WhatsApp rumours going around the proposed FRDI bill.

    This led to people withdrawing more money from ATMs and banks than they normally would. This hoarding of cash (for both electoral as well as non-electoral reasons) obviously made the already fragile situation where the economy was generally short on cash, even more precarious. It also explains why ATMs did not run out of cash during elections previously, but have this time around.

    The best way to prove this would have been to look at the total amount of cash withdrawn by people from ATMs in the states of Andhra Pradesh, Telangana, Bihar etc., where there has been a significant cash crunch. But given that state wise cash-withdrawal data is not publicly available, we will have to give this a skip.

    Over the past few days as the news of cash crunch has spread, it has become what economists call a self-fulfilling prophecy. The expectation that something will happen is making it happen.

    Also, as we have mentioned in the past, the economy is finally coming out of the ill-effects of demonetisation, and this has led to greater economic activity and more demand for cash, given that most economic activity in India is carried out in cash.

    Further, the Rs 2,000 note, which was introduced after demonetisation, is the preferred note of choice, when it comes to hoarding cash. The logic is simple. You can hoard more money in lesser notes. Also, the next highest denomination note now, after the Rs 2000 note, is the Rs 500 note, unlike the Rs 1,000 note earlier. And it takes four Rs 500 notes to replace a Rs 2,000 note. This accentuates the cash crunch.

    All these reasons have been responsible for the shortage of currency in India. But the major reason remains the lack of supply of enough notes in the financial system.

    Regards,
    Vivek Kaul
    Vivek Kaul
    Editor, Vivek Kaul’s Diary

    PS: Research analyst, Tanushree Banerjee has made a prediction: Sensex 100,000. If she’s right, there will be a lot of winning stocks. Some may already be in your portfolio. But you’ll also miss out on some. However, you don’t need to take unnecessary risks to make solid double or triple digit gains. Tanushree’s premium service, StockSelect, will safely guide you to the best stocks in the market. You can get full details here…

    -Read more at www.equitymaster.com-

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  • We Barely Avoided the Critical Doom Point

    20.04.2018 • United StatesComments Off on We Barely Avoided the Critical Doom Point

    Bill Bonner – Bill Bonner’s Diary (United States) –

    NORMANDY, FRANCE – Bitcoin is making itself useful. Bloomberg is on the case:

    “Bolívar to Bitcoin Market Hits Record $1 Million Per Day”

    The Venezuelan bolívar to bitcoin market reached a record on Tuesday, as the dollar-starved nation increasingly seeks the digital token in exchange for its nearly worthless currency.

    Venezuela is a disaster. Inflation is expected to hit 13,000% this year.

    But disaster isn’t sedentary. It’s nomadic. And our guess is that it is ed our way.

    Doom Index

    First, let’s turn to the research department to find out how close it might be…

    What’s up with the Doom Index?

    As you recall, our researchers – led by the indefatigable Joe Withrow – came up with a way to tell when a crash was likely to happen. We call it the Doom Index.

    No guarantees, because these things are unpredictable. But a measure based on a broad group of indicators should be more reliable than your editor’s hunches, right?

    Well, who knows.

    But yesterday, Joe gave us an update:

    The Doom Index spiked up to 7 – our extreme warning level – back in January… and it will remain at 7 for at least another three months based on first-quarter numbers.

    But it is not signaling the crash alert flag… yet.

    What has kept the crash alert flag in storage – and perhaps what will keep the markets chugging along for another quarter – is an uptick in credit growth. After falling to 1.6% last quarter, credit growth increased to 2.4% during Q1 2018.

    Remember, we are leaning on economist Richard Duncan’s analysis here. Duncan says that the modern economy requires at least 2% credit growth to avoid recession. So 2.4% is just enough to avoid a Doom Point.

    On the flip side, there was a sharp drop in non-farm payrolls. Non-farm payrolls steadily increased for 29 consecutive quarters – that takes us back to 2010. But they plunged 1.2% during Q1 2018. 1.2% sounds like a small move, but that’s the biggest drop in non-farm payrolls since the start of 2009.

    So we saw an uptick in credit growth, but a fall in wages this past quarter. Perhaps those two moves are related… I don’t know… But we find ourselves right back where we were in January.

    Okay. “Extreme warning.” But no crash yet.

    Got that?

    Real Catastrophe

    And while the data is giving us an “extreme warning,” so are the fundamentals – which is why a catastrophe may be ed towards us… and why there may be no way to avoid it.

    Markets go up and down all the time – sometimes sharply.

    People never know what things are worth. They discover prices by bidding against one another. And human beings tend to overdo it.

    They get overly optimistic or overly pessimistic… driving prices too high or too low… causing mini-booms and panics.

    Between the end of the War Between the States and the Great Depression, there was the Panic of 1873, the Panic of 1884, the Panic of 1893, the Panic of 1901, the Panic of 1907, and the Depression of 1920–21.

    The pain and damage done by these setbacks varied. But generally, they came and went. Markets quickly adjusted. Prices fell. Companies went broke. Entrepreneurs and speculators picked up the pieces… and got back to work.

    Anyone can make a mistake. But if you want a real catastrophe, you need the government. The feds began to “do something” about these periodic overshoots following the crash of ’29. The result was the Great Depression.

    Then, the Federal Reserve got in on the action.

    Taking Away the Punchbowl

    The Fed was set up in 1913. At first, its job was modest: to protect the currency and make sure the big banks made money.

    This it did cautiously, at first, by “taking away the punchbowl,” as former Fed chief William McChesney Martin described it, when the party started to get out of hand.

    It wasn’t until the 1980s that the Fed became the life of the party itself. By then, the U.S. had a new currency (the ever-stretchy, post-gold-backed dollar)… and the politicians had realized that “deficits don’t matter.”

    They didn’t seem to matter because beginning in the late-’80s, the Fed was no longer restraining excess spending… It was enabling it.

    Deficits used to draw down the nation’s savings. That’s because the feds had to borrow to fill in the hole. And when you borrowed, you borrowed what someone else had saved.

    No more. The new dollar and the Fed’s low interest rates made real savings irrelevant. The Fed dropped interest rates to make saving unattractive… and covered the deficits with fake savings – credit it invented “out of thin air”; it bought U.S. Treasury bonds itself.

    Back when the feds had to borrow real savings to close the gap between outlays and tax receipts, there was a natural limit on what they could spend.

    If they borrowed too much, they “crowded out” private borrowers. Interest rates rose. Savings increased. The economy cooled down. And tax receipts fell.

    Every lawmaker knew that the federal government had to manage its finances responsibly. Neither party wanted to get a reputation for incompetence with money.

    But now, all that has changed. The illusion of abundance – provided by the Fed’s EZ-money policies – has bamboozled them all.

    More to come…

    Regards,

    signature

    Bill

    MARKET INSIGHT: TRUMP GREENLIGHTS LEGAL MARIJUANA

    By Nick Giambruno, Editor, Crisis Investing

    The legal marijuana market just got a huge boost thanks to President Trump…

    Some readers may remember that, earlier this year, Trump’s attorney general, Jeff Sessions, rescinded an Obama-era policy that made it easier for legal marijuana businesses to operate.

    You see, marijuana is legal in many states. But it’s still a Schedule I drug according to the federal government.

    And what Sessions did in January made it easier for federal authorities to crack down on the legal marijuana industry.

    That had many investors on edge… uncertain of the future.

    But now, it looks like the president is putting his foot down.

    It’s being reported that Trump is abandoning the Justice Department threat to crack down on recreational marijuana. The decision came after a Colorado senator appealed directly to the president.

    In short, Sessions got overruled by his boss.

    Trump the Businessman

    I think there are a few reasons why Trump gave the marijuana industry a green light.

    For starters, legal marijuana is now very popular among Americans. Have a look at the data recently released from Pew Research:

    Chart

    As of last year, marijuana legalization was favored by 61% of Americans. Compare that to only 12% back in the late-’60s.

    But I think there’s another reason why Trump is happy to let the legal marijuana industry grow: money… and lots of it.

    The legal marijuana industry is estimated to be worth around $7.7 billion today. But by 2021, it’s predicted that it will hit $31.4 billion and that it will see a compound annual growth rate of 60%.

    Think about that. The legal marijuana industry is expected to more than quadruple in the next three years.

    And as I’ve reported in the past, states like Illinois with unfunded pension liabilities will need the tax revenue from legal marijuana to dig themselves out of the financial holes they’re in.

    That’s not wild conjecture. The Wall Street Journal confirmed as much when reporting on the Illinois gubernatorial race last month:

    Democrats running in state primaries across the country have been promoting legal marijuana as a painless way to raise money while avoiding tax increases.

    In Illinois, the candidates vying to be the party’s gubernatorial nominee are so invested in the issue they have been attacking one another for failing to embrace it with enough vigor.

    So let’s think about this…

    More Americans want legal marijuana than ever before… the industry is expected to skyrocket… and more and more state governments are getting on board.

    No matter what you think about the president, remember, he started life as a businessman. And he knows a promising investment when he sees one.

    – Nick Giambruno

    P.S. Don’t worry if you missed the first wave of marijuana investing. We think the 2018 marijuana boom could be eight times bigger than the first… when pot stocks averaged peak gains of 24,000%.

    But this second chance is time-sensitive. We’re sharing all the details on Thursday, April 26 at 8 p.m. ET, during the Pot Stock Millionaire Summit. Space is limited. So click here to reserve your spot now.

    -Read more at bonnerandpartners.com-

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  • Goldman Sachs CEO: The Return Has Begun

    20.04.2018 • United KingdomComments Off on Goldman Sachs CEO: The Return Has Begun

    Nick Hubble – Capital and Conflict (United Kingdom) –

    Today we imagine a return to a normal world. Or at least try to. Because it wouldn’t last long.

    Goldman Sachs CEO Lloyd Blankfein gave an interview on CNBC after his company announced its earnings for the first quarter of 2018. Here’s what he said:

    “People will debate back and forth what’s normal, what’s the new normal, but conditions where interest rates are zero, yield curves are flat, there’s no risk premium. Where central banks all around the world are buying all the risky assets which then therefore put a damper on volatility and the opportunities to perform, that’s not a natural state.

    “We have not reversed all of that, but we’re walking that back and walking to so the first indications of a withdrawal from what is an unnatural state.

    “The market becomes a bit more volatile, people get compensated for the risk that they’re taking. Our clients are doing better consequently we’re doing better with them. So I wouldn’t say we’re popping champagne corks. But we can certainly see what happens when we start to walk back towards a normal financial market.”

    And now for the context. Goldman’s equities trading branch posted a bumper profit, both higher than expected and higher than previous results.

    The question is of course why. And the answer is the 10% crash in February.

    Investment banks like Goldman Sachs make good money on trading volatility. The problem is, the central banks have quashed just that volatility. Blankfein is both complaining about this and celebrating the return of volatility in February.

    Yay for Goldman Sachs. Who gave me a scholarship and internship, by the way, for the sake of disclosure.

    The problem here is that the rest of us are not Goldman Sachs. And trust me, you don’t want to be.

    We’re stuck with the real economy and struggle to make money on market crashes. The team is preparing a report on how to do just that, so keep an eye on your inbox.

    But let’s imagine a return to what Blankfein calls the “natural state”. Where markets are more volatile, the yield curve unmanipulated, interest rates are higher and central bankers don’t buy risky assets. What would that world be like?

    A total nightmare.

    The International Monetary Fund’s (IMF) Global Financial Stability Report estimated 20% of US companies amounting to $4 trillion in assets are at risk of going under if interest rates go up, with half of those already in trouble.

    In Europe, the so-called “zombie firms” are kept alive by banks to avoid having to realise losses. The problem is that bank funding costs will rise as the European Central Bank tightens. Italy’s bad debt problems alone are the size of US sub-prime defaults.

    What would the Japanese stockmarket look like if the Bank of Japan hadn’t bought up three quarters of stock exchange-traded funds, about 4% of the total market?

    Worst of all is sovereign debt. If the interest bill on sovereign debt were at a “natural” level, budgets around the world would be wobbling.

    The natural state is simply not tenable. It won’t be allowed. But…

    How long can it be avoided?

    The real question is whether the reckoning can be prevented indefinitely. Could a recession occur in the face of very easy monetary policy and quantitative easing (QE)?

    If you run with the drug analogy, then the question is whether the QE and interest rate drug is becoming ineffective. If the patient is so used to the drug that it can’t fight off a depression, what happens next?

    The IMF is forecasting a slowdown in two years’ time. As is the US yield curve. So we might soon find out whether QE can save us once more.

    The thing to keep in mind here is that debt levels are steadily worsening in the meantime. Despite decent growth, low interest rates and vast levels of support.

    The government and central bank rescues have sent the world a clear signal that debt doesn’t matter by preventing a reckoning. And so everyone did the predictable thing – borrowed more.

    How long can something like this continue? The answer is, a lot longer than you think. That’s why logical analysis is sometimes not so helpful. The moment you depart from the natural state, things start to look bizarre. But they can get a lot more bizarre, so pointing out the coming reckoning doesn’t help until it happens. It’s all about timing.

    Akhil Patel has a very good understanding of the machinations of governments and central banks. But they’re not his focus. He’s all about timing.

    The best part is, the whole cycle of upswings and downswings that Akhil has identified is predictable. Because of that, Akhil is always on the record. His predictions are always clear cut. So what does he say right now?

    That’s for his subscribers to know. But I’m allowed to say this: we’re mid-cycle. A time characterised by a slowdown, or a minor downturn. Not a crash or a reset.

    To find out what you should do to profit from the coming upswing, click here.

    -Read more at www.capitalandconflict.com-

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  • Understanding the “Crypto Paradox”

    20.04.2018 • United KingdomComments Off on Understanding the “Crypto Paradox”

    Harry Hamburg – Exponential Investor (United Kingdom) –

    Yesterday, I revealed that I’ve been working on an exciting new project.

    Today, I’m going to reveal the nature of that project – and why I think it could have a huge positive impact on your life and wealth going forward.

    But first I want you understand why I have dedicated the last few months of my life to this new idea.

    It involves something I’ve called…

    The Crypto Paradox

    Late one night a few months ago, I went down a bit of an internet rabbit hole…

    And I stumbled across a strange phenomenon – the Coastline Paradox.

    The Coastline Paradox is a mathematical anomaly. First stumbled upon in the early 20th century by Lewis Fry Richardson. The phenomenon has a touch of Doctor Who about it, so I think you’ll find it interesting.

    Richardson was attempting to accurately measure the coastline of Great Britain. And what he discovered is mind-bending…

    If the coastline is measured in units of 100km, then the length of our coastline is 1,700 miles. Simple.

    But if the unit of measurement is 50km, the length of our coastline is 2,100 miles.

    So, the measured length of the coastline depends on the method used to measure it.

    Take that in for a moment. The length of our coastline is not an objective fact. It is based purely on the decision to measure it in a certain way.

    This quirk of fractal dimensions got me thinking about cryptocurrencies.

    How can you measure the true worth and impact of cryptos?

    Again, it depends on how you decide to measure them…

    As a speculative investment, you can only conclude they offer an unprecedented level of return…

    8,338% – Stellar

    35,010% – NEO

    822% – Monero

    1,057% – Stratis

    76,033% – Nano

    464% – Dash

    1,630% – Steem

    13 April 2017 – 13 April 2018

    Remember: Past performance is not an indicator of future results.

    Ok, but what about as a form of currency…

    Well, by that measure, cryptos lag way behind.

    The crypto market is valued at about $345bn at time of writing.

    Not bad for a form of currency born around eight years ago – up against a monetary system more than 7,000 years old.

    But a long way to go, yet. Until you can spend your crypto in Tesco, at the petrol pump and on websites like Amazon, it’s just a cute blip in the long history of money.

    What if we look at cryptos as a store of wealth?

    Well, it depends on your timescale.

    Over the last five years a £10k investment in gold – everyone’s go-to wealth bunker – would see you sitting on £10,260 right now.

    A £10k investment in bitcoin – what many call “digital gold” – over the same period would have landed you a profit of around £550,000.

    That’s not fair, I hear you cry! Five years isn’t long enough (note: it’s most definitely “long enough” for those sitting on a half a million profit!).

    But gold has held value for millennia. Maybe in a hundred years we can draw a conclusion. Unfortunately I won’t be writing to you then – and I’ll lay money you won’t be reading.

    So let’s be reasonable… bitcoin, like all cryptos, is wildly volatile… so it doesn’t give you the “sleep easy” feel of owning a lump of shiny metal.

    As a species we attribute an inherent value to gold like nothing else. If you disagree, let me ask you this: in an apocalypse, when you’re trying to barter your way on to the last helicopter out of London – do you think the pilot will want your USB drive or your sack of sovereigns?

    What about cryptos as a commodity…?

    There can only ever be 21 million bitcoins mined… and we are approaching the 17 millionth fairly soon. Similar circulation limits are placed on many of the most valuable crypto assets.

    A supply crunch in bitcoin’s future is a distinct possibility. Especially if it continues to expand its user base and popularity at such an astonishing rate.

    That said, there is an advantage that other commodities have over cryptos:

    Oil powers your car. Lithium charges your phone. Gas cooks your spaghetti.

    The demand for fossil fuels and precious industrial metals can be said to be “real”.

    So, you see the problem, the Crypto Paradox. The “worth” of cryptos depends on how you decide to measure them.

    But I believe there is a very simple way to avoid the Crypto Paradox:

    View cryptos as a technology.

    If you do so, then the breakthrough that cryptos have made… the tokenisation of assets and the decentralisation of information, energy and power… means only one thing:

    The most significant invention since the internet

    Yes, crypto and the blockchain is changing the way we accumulate, store and spend our wealth… but that is just a tiny part of the greatest wave of tech disruption the world has ever seen.

    You can compare it to the internet revolution… but the impact could be even greater than that.

    We are witnessing the early stages of an entirely new system to exchange information and ownership.

    If you’ve read Exponential Investor for any length of time, you’ll know this is something of an obsession of mine. I won’t apologise for it.

    Firstly, it’s a useful obsession – cryptocurrencies have changed my financial life.

    Secondly, my aim is to help you do the same. More on that in a moment.

    What I want you to see is that the crypto rush is about more than rolling £500 into bitcoin or Litecoin on a jolly and crossing your fingers.

    This is a tech overhaul akin to the laying down of railroads or fibre optic cables. It is a new type of tech infrastructure on which the future of business, healthcare, finance and entertainment is being built.

    And some of the world’s biggest and most influential entities are vying to grab a slice of it. Here is just a glimpse of the daily mad rush of investment into crypto and blockchain tech:

     

    This is just a snapshot of the stampede into crypto and blockchain technology… the trickle before the flood.

    Forget crypto assets as speculation… as a commodity… as a bunker for your wealth… and look at the bigger picture. This is a torrent of technological change. And it is happening now.

    But just what could this mean for the market?

    How big could this get?

    A $10 trillion surge

    It is impossible to predict with any real hope of accuracy how big the blockchain market could become.

    For example, if the securities market – currently valued at around $18.5tn – “upgrades” to run on the blockchain (as many believe it will)… how can you calculate its worth?

    How much is the internet worth?

    How much are railroads worth?

    Or oil pipelines?

    We’re talking about technology that underwrites our civilisation. And that is hard to round down to the nearest trillion.

    A few respected financial minds have had a crack at doing so, however:

    Jesse Powell – founder of giant alt-coin exchange Kraken – believes the crypto market could surge to $1tn this year.

    It’s hard to know if any of these predictions will ever be proven correct.

    But what’s worth noting is the scale of the numbers being suggested. These kinds of figures give you a major hint at what is just around the corner.

    Nothing less than the greatest tech revolution – and financial opportunity – any of us have ever seen.

    You can boil it down to two undeniable factors staring you in the face:

    1. A torrent of technological change and innovation that is transforming everything from energy to healthcare to finance to property ownership. Crypto tech is a completely new information exchange comparable to a new sort of internet. That’s big.
    2. The potential to make life-changing money is real. Not a dream. Not a far-flung fantasy. It is real. The crypto market is already the fastest rising asset class we’ve ever seen. It has already minted a wave of millionaires. And where it goes from here could be historically spectacular.

    Presented with those two facts, you have a straightforward choice to make.

    To become a part of it… to learn everything you can about this exciting technology and do everything you can to profit from it.

    Or walk away… and just be a passenger as crypto and blockchain technology evolves and changes the world around you.

    My hope is that you can see the enormous, exciting potential to be an active participant in what’s happening… to not miss out on the second great tech revolution of your lifetime. One that could prove even bigger and more impactful than the rise of the internet and monstrously rewarding stocks like Google, Netflix, Amazon and Cisco.

    If that’s the case…

    My new project is for you

    It has taken three months to bring my new project to you.

    It’s a way for you to gain unrivalled research and insight into what’s happening in crypto and blockchain technology… and have a clear idea of how you could profit from it.

    I’m not on the outside looking in, here. I’m right alongside you for the ride. I am a crypto investor and over the last 18 months I have made more money from cryptos than I would ever have thought possible.

    It has changed my life and I am confident it can change yours.

    My goal is to show you my approach in totality:

    My know-everything level of research… my special crypto-asset ranking system… my methods of mitigating the high risks as much as possible… how to draw in crypto income.

    I want to show you everything I have learned from this new and thrilling world.

    Because – as I will show you tomorrow – my research tells me we could be on the verge of the next phase of extreme growth in the crypto market.

    Getting clued-up now could see you catch the most aggressive wave of asset growth in history.

    You won’t get left behind. I’m going to show you everything in a way that is easy to digest and easy to understand. I’m going to walk you through all of this in a way I wish someone had shown me 18 months ago.

    If I do it right, you could use this insight and experience to invest in cryptos capable of outrageous long-term growth.

    I’ve been in financial publishing for seven years. No opportunity has spoken to me like the rise of cryptocurrencies. Not small cap stocks. Not biotech stocks. Not gold miners.

    That’s because this isn’t just about the wild financial rewards that are possible… but because of the deep, liberating change the technology brings.

    My goal is to marry those two big, compelling ideas together for you: that this world-changing technology is capable of generating life-changing wealth.

    Tomorrow, at last, I can bring you in on what I’ve been working on.

    If you have liked my work in Exponential Investor so far… I think you’ll love what’s next.

    Until tomorrow,

    Harry Hamburg
    Editor, Exponential Investor

    -Read more at www.exponentialinvestor.com-

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