Sunday, January 10, 2021

Big Tech Suppresses Free Speech Through Censorship

This Warning We Must Take Seriously

It appears that silencing the masses is not just for countries such as China. The wholesale move by huge tech companies to put its footprint on the neck of free speech speaks volumes about the powerful dictating the direction of society. This all raises to mind the line used by George Orwell in his novel Animal Farm. While the phrase "All Animals are Equal" started as one of the seven commandments, the Animal Farm pigs soon reinterpreted it to read as “ALL ANIMALS ARE EQUAL / BUT SOME ANIMALS ARE MORE EQUAL THAN OTHERS.”

This phrase has become one of our culture's ultimate examples of how the systematic abuse of language and logic can systematically be used by those with the intention of taking control of those they consider, shall we say, beneath them. Two noteworthy tools used to achieve this goal are propaganda and censorship. The sad reality is that "Power To The People" is dead because we are often unable to agree on anything. Even when people come together in general agreement forms, many individuals are so ridged they allow the finer points and details to become stumbling blocks to moving forward. 

In many ways, big tech and mainstream media have become a polarizing force that stirs the pot of social unrest. By promoting polarization they have made it impossible for the American people to unite and regain any control over Washington. This situation benefits those wishing to expand their control over us. Ironically, they are probably giddy over the problems Facebook has created by playing fast and loose with data from its followers. Facebook by crossing the line and abusing the trust of those with accounts and information posted on  its platform has taken the pressure off of the mainstream media to do a better job.

More unsettling is the alliances' companies like Amazon have made with the sector of our government that spies on us and spins the narratives to which we dance. This creates a powerful platform ripe for exploitation by those with an agenda. Propaganda is a powerful tool that has resulted in many wars that enrich those who make weapons at the expense of those called upon to give their blood. The fact that behemoth Amazon has intertwined business interests with the CIA, NSA, and several other "Deep State" government agencies is a monument to our having lost control. 

Big Tech Has Taken Control Over Our Right To Free Speech

Proof of the bond between big tech and our government is evidenced by the massive contract Amazon's cloud division has with the CIA and NSA. Connections such as this should send shivers down the back of those believing in freedom and limited government. Anyone who doesn't believe that countries use psychological warfare and propaganda to sway the opinions of people both in and outside of their country is naive.  This tangled mess includes the influential Washington Post which is owned by the CEO of Amazon, Jeff Bezos. Simply put, this has unleashed a propaganda force to which none of our institutions can resist.

This is also where censorship comes into play, censorship is in many ways a reverse form of propaganda. It is not a mistake or oversight that many mainstream media outlets give their audience little ability to give feedback. They go out of their way to avoid anything that might dispute their narrative. While it could be argued the lack of a comment area or feature linked to an online format was an omission I often see this as something more sinister. The lack of a feedback loop is a tool that tends to reinforce the idea there is no objection or criticism of the article or statement and everyone accepts its conclusions.

 A "False Flag" Distraction

Censorship is the suppression of speech, public communication, or other information, on the basis that such views or material have been deemed objectionable, harmful, sensitive, or "inconvenient." Censorship can be conducted by governments, private institutions, or corporations. This includes mainstream media. Removing the platforms on which we present our opinions is censorship.

By its nature censorship often implies those being silenced are trying to say something very wrong. I consider censorship and mainstream media's role in it as part of the self-feeding propaganda loop that plays such a huge role in shaping public opinion. This tends to result in those in leadership positions and controlling the media to slowly hack away at our individual rights by furthering the idea it is all "for the greater good." The fact is politics should not even enter into the free speech debate.

The idea of having a press that is free to cover the news is generally linked to the idea they will be fair and even have an obligation to be so because such a freedom generally comes with a degree of responsibility. A common example of how freedom of speech and this obligation go hand in hand is while someone has the right to speak their mind, they do not have the right to falsely scream fire in a crowded theater. This can slip into an argument as to the duty of the media in presenting as unbiased a view of events as possible. 

This subject has been muddied and complicated by the fact many news outlets have moved more towards an entertainment format rather than presenting the cold hard facts This is often because it allows sensationalism which draws viewers. Today many people get the majority of their news over the internet which is controlled and shaped by big tech. While this has made a huge difference in how news is distributed and how we receive the news, much of the content remains controlled by a few strong players that often are driven by an agenda of self-interest.

I contend the subtle omission of a comment section online is often an effort to quell dissenting voices rather than because it to simplify the format. It could be argued that the media has a moral obligation to provide such a public forum if they want the right to call themselves "free and balanced." It  is a red flag when you are told YOUR OPINION IS NOT REQUESTED OR WANTED!

Many of us out beyond the beltway in the backwaters and wilds of America have grown to feel the media has a casual relationship with the truth. In many ways, the media has become viewed more as a tool of the establishment than the protector of the people and defender of our rights. This could explain why the press is often held in such low esteem by the very public that relies on them for information. Coverage filled with subtle digs or comments and even subliminal messages taints the premise media is fair. During interviews, we often get an opportunity to witness examples of just how badly you can treat a guest invited to answer questions when they alter the narrative being pushed. 

This often results in over the top efforts to put words in someone's mouth and take statements out of context. These words are then spun in the most harmful ways. If the guest represents views differing from the interviewer what we often see is an ambush. If a guest is favored or their views are endorsed it is often as though they had written the softball questions asked of them or as if they had been given the questions in advance or controlled the interview. All this can then be backed up by a series of scripted statements that all loop back around to support a hard or subliminal message.

Free Speech Is Our Most Sacred Right

With the biased coverage of current events being very common, it is little wonder that Americans question the honesty of the media whose ranks appear to have become filled with opportunists and bums dressed as a journalist. Free speech is the cornerstone of freedom. Our forefathers in their wisdom made it an intricate part of our civil rights, it was not by accident it was the first amendment. It was their clear intention to protect our right to speak out even if people disagreed with what we wished to say. Free speech is not a right we should yield or ever surrender.

Because we often don't agree with everything we view or read "implied agreement" is not valid. Even including a simple thumbs up or down box at the end of an article gives readers a place to weigh in. If only one option is present today it is a place to voice agreement. It is not an oversight that no place is available to object. Next time you are boiling mad or disagree with how an article is characterizing an event I urge you to take the time to see if the source has provided you with an opportunity to present your view. Do not be surprised if they have not.

( Republishing of this article is welcomed with reference to Bruce Wilds/AdvancingTime Blog )

Saturday, January 9, 2021

Fed Driven Bubble Destined To End Badly

At Best, The Fed Is Simply A Flawed Institution

Reassurance from central banks is only emboldening investors to add to their risks. Regardless of what he says Fed Chair Powell has confirmed the Fed plans to continue its role as the great enabler. Every time the Fed signals more easing or that it will keep rates low it boosts the ability of other central banks to do the same and governments to add to their stimulus packages. This is why those demonizing the dollar may be wrong, if anything all fiat currencies that are under pressure from this expansion of the money supply. 

Central banks across the globe have been able to lower their rates or do additional stimulus without causing concerns their currency would crater. The fact that so many loans across the world are based and loaned in dollars means countries and businesses must buy dollars to repay their obligations. This puts a bit of a foundation under the dollar going forward. It could be argued the reason several countries have reduced their US Treasury holdings is not that the dollar is slated to fall but is more related to the fact they have problems at home and need dollars in order to service their debt obligations.

Adding to the complexity of money flows is that America's stimulus packages are simply putting more icing on China's cake and the other countries that enjoy a trade surplus with America. We are carrying the world on our shoulders. Rather than paying rent or making mortgage payments, it seems from the exploding trade deficit that Americans are taking much of the money they get from Uncle Sam and buying imported goods.   

When Powell attempts to explain his continued actions, many of us who pay attention to such things cry "Bullshit." Not only is the current Fed policy uncalled for but it does little to strengthen the economy or address our problems. What it will do is continue to prop up asset prices and encourage risk-taking and malinvestment. This is a big deal and will result in more negative interest rates across the world. Due to the artificially low cost of credit and an unsustainable increase in the money supply bubbles are forming everywhere.

The suggestion that the global financial system was in big trouble even before Covid-19 entered the picture and the pandemic has been used to shift blame and focus away from the governments and central banks that have failed us is full of merit. The situation we are witnessing is not from a failure of injecting enough liquidity into the system but that liquidity is being diverted from where it is needed. The idea more liquidity can make up for a solvency problem is unrealistic and turned failing companies into zombies. 

The market has reached the point where profits are no longer required to generate a return on investment. Bubbles represent a major disconnect from reality. Companies borrow money extremely cheaply by issuing corporate bonds, use it for stock buybacks and shareholder dividends. thus furthering the disconnect between the value of stocks and the economy on Main Street. 

Bitcoin Is An Option To Fiat Currencies

While Nasdaq is banging out a new record high and Bitcoin also hitting all-time highs, much of the world remains locked-down due to the covid pandemic. Much of what is happening on Main Street is being ignored. Much of bitcoin's surge is attributed to growing inflation expectations based on the debasement of currencies. The rise in stocks is also coupled to the expected future economic relief packages that will soon roll out of Congress.  

Adding to our future economic woes is that the Feds easy policy strongly favors big business. This results in the destruction of many small and medium-sized concerns. This has caused inequality to surge during the rash of lock-downs. We are yet to see the massive toll people working from home will take on office buildings or the total devastation online shopping has unleashed upon retail property. The fact that many businesses cannot pay their rent or mortgage payments is a "lag time event " that will only show up over time.

Investors hope to see a big pop in consumer spending due to another round of checks being put into the hands of individuals. This expected bounce in spending may fall short of expectations. Where the massive package passed last spring caused the bizarre situation of incomes rising during a recession this is more a scaled back continuation of expiring programs. It would be wise to remember what we are witnessing is constructed on a foundation of growing debt. This is made clear in the chart below which shows the change in Debt-to-GDP from Q42019 through Q3 of 2020.

In the Austrian business cycle theory, malinvestments are badly allocated business investments, A strong case can be made that we already suffer from far too much leverage in our markets and this rate cut only encourages savers suffering from low-interest rates to take on more risk in search of higher yields. It has been pointed out on many occasions that low-interest rates do not extend down to low-income individuals with poor credit and many people fall into this category. Instead, over time these rates fuel inequality and punish the poor. Unfortunately, the concept that a rising tide floats all boats or trickle-down economics tends to heavily favor the rich. 

We see this in housing where few of the new apartment construction funds are generated locally and much of the building is no-longer based on real need but centered around the whims of huge real estate companies. This is part of the reason roughly 80% of new apartment construction is now for the high-end luxury market. Again the government and Wall Street money is driving this train. While retailers close and large buildings go empty across the land new buildings are being put up on speculation and bogus public-private partnerships are plowing vast sums of money into projects geared to compete with those that already exist. the fact is all across America the Fed is putting the small guy out of business.

Feds Low Rates Have Enabled This (click to enlarge)

The stock market and not the economy. People that point to the market as proof that all is well put stocks in front of the real indicator of our economic strength which is the middle and lower class. The disconnect between the working people and the financial community is apparent in the difficulty people with small businesses have getting loans or financing a project while big business is fed billions of dollars by the banks and Wall Street. If anyone is losing confidence in the system it is these people. This is not a problem Biden or any politician can solve with government social programs.

At some point to reestablish true price discovery it will be necessary to break the well-ingrained habit of "buy the dip." This method of trading has worked since October 19th, 1987 when the Dow Jones Industrial Average (DJIA) dropped 22.6 percent in a single trading session. That is the day the actions by Fed Chairman Greenspan galvanized the mantras "buy the dip" and "don't fight the Fed." Greenspan did this by affirming the Federal reserve would be there "to serve as a source of liquidity to support the economic and financial system." 

The trading patterns flowing from investors buying the dip are now ingrained in the algorithms embedded deep inside the computers that drive much of the stock market's action. As noted earlier, to the chagrin of those with a negative view of the Fed, Powell has confirmed the Fed plans to continue as the great enabler. The rapid expansion of debt and credit during the last decade could not have occurred without the Fed being complicit. When things move too far in one direction adjustments do occur. Do not be surprised if the dollar again jumps higher as the reality sets in that many countries will do far worse than America in the coming months. For now, we watch and wait while the market again tries to discover its true value both here in America and across the world. 

 ( Republishing of this article is welcomed with reference to Bruce Wilds/AdvancingTime Blog )

Tuesday, January 5, 2021

Apple May Soon Join Tesla In The EV Auto Sector

Apple Like Tesla Has A Cult-Like Following
Recently Apple threw its hat into the ring when it announced its intention to move forward with developing self-driving car technology. It should be noted that when a company with the market cap of Apple and a great deal of money decides to move into the auto industry it can buy all or most of a struggling automaker. This would give them an instant production capacity. This means Apple can rapidly jump into the EV market. 

According to Reuters, Apple is targeting 2024 to produce a passenger vehicle. Make no mistake, this has the potential to derail Elon Musk's plan for Tesla to put out a million robotaxis. This places Apple in the position of competing with others with major self-driving projects, including Tesla and Google/Alphabet's Waymo project which stands for a new way forward in mobility. Google started working on a self-driving car several years ago but so far has little to show for its effort. 

Apple seems very interested in pushing its way into this sector of the economy. Adding to the validity that Apple is serious about moving in this direction, Reuters also reported Apple's cars might include sensors and a new "monocell designed battery" that has been developed internally at Apple. Such a battery could be a much-needed breakthrough in battery technology. The lack of better batteries is one of the biggest problems currently facing the EV industry. 

All EV manufactures are seeking new battery designs that could "radically" reduce battery cost and increase a vehicle's range. A better battery has been seen as the Holy Grail of the EV industry. While some people point out Tesla has been moving to improve its batteries the same could be said about all these companies. More efficient motors in these vehicles are also important. The Toyota Prius also uses IPMSynRm Motors such as used in the Tesla Model 3.

An interesting question was put forth in the form of a comment on another webpage: How many of the 499,550 Telsa's sold in 2020 were to straw buyers? and of those, how many will be dismantled and have their parts recycled back into 2021 models? This comment suggests that some people and investors forget how numbers can be fudged and Tesla has a great incentive to do such a thing. The company is in a self-feeding loop and so overvalued that it can afford to buy its cars and ship them to the bottom of the sea because each car they sell has been driving its stock ever higher.

It Appears That China's EV Sales Peaked In June Of 2019

Tesla has an almost cult-like following but there is more to its story than that. You can also throw into the mix an article that appeared weeks ago about how China was forcing a recall of Tesla Model S and Model X vehicles. This indicates a "bump in the road" is forming between the company and the Chinese state. Then, on Christmas, Chinese company Pingwest released what can only be called a brutal expose about quality control and working conditions at Tesla's Shanghai factory. 

The article titled "Giga-Sweatshop Meets Corporate Overlords: an Exclusive Look Into How Tesla China Runs its Shanghai Gigafactory 3." The piece lays out how quickly Tesla was able to set up shop and begin producing in China, and how it sent the company's stock price soaring up over"six-fold" in 2020. The piece then begins to poke holes in the idea Tesla is a picture of "blindingly quick efficiency." It claims behind-the-scene stories inside the non-stop Shanghai Gigafactory are much darker than people have been led to believe. It points to low "quality standards" and other problems at the plant.

Many people do not realize that while Tesla has dominated our EV market, as an American company it may have an uphill battle for market share in other countries even if it builds a plant there. The chart to the left is from the first eight months of 2019, it shows the Tesla Model 3 lagging far behind its domestic competition in the massive Chinese market. At that time, the BAIC EU-Series was the top-selling model.

The chart to the right paints a far brighter picture for Tesla but several factors skew its accuracy of predicting future sales. These include Tesla's factory opening which has now been topped off by some of the bad press in China. Interestingly, again we see Tesla in China also shows signs of being addicted to end-of-quarter peak deliveries. In Q2, the Model 3 started slow (4,312 units in April), then picked up the pace in May (11,468), and ended the quarter with a bang, with 15,023 units registered. 

This replicates Tesla’s typical sales pattern in other places. This means the  Tesla Model 3 dominated the scene in China during June almost tripling the deliveries of the surprise runner-up, the Baojun E-Series. Adding to the confusing numbers is the growth in this market was negative in June 2020, overall China was down 6% year over year with plugins doing much worse, down 53%. Muddying things even further is the fact June 2019 marked an all-time high for plugins in China, due to a sales boost from subsidies changes that occurred.

Three years ago few people thought Tesla would be the force it is today. Even less considered it would be trading at 1,458 times earnings. While I expect nothing written here or elsewhere will change the mindset of those bullish on Tesla, I echo the message of, while almost 500,000 deliveries globally is a big number for Tesla, it constitutes only a fraction of the global auto market. In 2020 is estimated 73 million vehicles were delivered. This means Tesla’s global market share in 2020 was just 0.7%. This screams that Tesla is massively overvalued.

It may be difficult for those caught in all the EV euphoria to remember the gasoline engine is not dead and not everyone desires a vehicle that is self-driving. Still, it is difficult to deny that Tesla has astounded investors and is the talk of the markets. With a market cap of 669 billion dollars Tesla's market cap is larger than the combined total market cap of Toyota (Toyota and Lexus), Volkswagen (VW, Audi, Porsche, and many other brands), Daimler, GM, BMW, Honda, Ford, and Fiat Chrysler. Each one of these companies manufactures far more vehicles than Tesla.  

Circling back to Apple and whether it could rapidly become a force in the EV market and damage Tesla's position, this is something only time will reveal. After Apple reiterated its intent to move into this market, Bloomberg technology columnist Tim Culpan noted that Apple CEO Tim Cook's ability in delivering iPhones at scale bodes ill for Tesla. A wild card here is that Apple often contracts out much of its manufacturing. Apple becoming a force in the automotive market may be difficult to imagine but Tesla's success which made Elon Musk, its CEO and founder the second richest man in the world was also unlikely to the bulk of investors.

Saturday, January 2, 2021

The EU Is At Risk Of Becoming Subservient To China

Europe Cannot Out-trade China
The EU is taking the path of strengthening its ties to China in the hope it will spark an economic renaissance. The Euro-Zone was already in deep trouble before CoVid-19 hit. Argue as you may but the bout of economic weakness that started in 2017 never ended. The latest scheme cooked up by Brussels seems more of its policy to extend and pretend all is well. The EU abandoned all structural reforms in 2014 when the ECB started its quantitative easing program (QE) and expanded the balance sheet to record-levels. Playing into Europe's problems is that in 2019, almost 22% of the Euro Zone GDP gross added value came from Travel & Leisure, a sector that will unlikely come back anytime soon. 

To avoid the union coming apart at the seams the European Commission last year unveiled an unprecedented  €750BN CoVid-19 recovery plan. It consisted of €500 billion in grants to member states and €250 billion in loans. This means those in Brussels are seeking a major extension of their power to where they can borrow money under the premise it will aid in ending the worst recession in European history and at the same time shore up Italy. This would result in transforming the EU’s governing body in Brussels by allowing it to raise unprecedented sums on the capital markets to shore up hard-pressed EU countries. 

Roughly 80% of the Euro-Zone's real economy is financed by a banking sector that carries more than 600 billion euro in non-performing loans. Unemployment is also a problem, almost 30% of the Euro Zone labor force is expected to be under some form of unemployment scheme for years. France, Spain, and Italy, with important rules and tax burdens on job creation, may suffer large unemployment for even longer. As of 2017, not a single European company ranked among the top fifteen technology companies in the world and only four of the top 50 global technology companies are European. This is why skeptics are concern that if the politically directed "Green New Deal" agenda doesn't boost growth or reduce debt the Euro-Zone will remain economically stagnate.

The elephant in the room is that the Euro-zone region simply isn't competitive. The EU lacks technological and intellectual property and is falling further behind the U.S. and China. Germany, the regions manufacturing powerhouse continues to skirt along narrowly escaping recession while France, Spain, and Italy face years of large unemployment levels. It was clear that the EU was struggling in the spring of 2020 when the European Commission sharply revised lower its economic growth forecast for the area due to Covid-19. So far, the European Commission's expectations its economy would rapidly rebound have been dashed by a second wave of the pandemic. 

To generate the impression of hope the EU's leaders in Brussels are trying to pull a rabbit out of the hat by strengthening ties with China. The Guardian recently reported that China and the EU now appear to have resolved their differences over protecting labor rights in China and are set to sign a long-delayed investment agreement. This would strengthen ties between them and make the economies of the two blocs more interdependent. The investment talks address opening up Chinese markets for European investment, as well as addressing Chinese practices opposed by the EU concerning industrial subsidies, state control of enterprises, and forced technology transfers. 

A sticking point for the talks launched in 2013, has been the treatment of Uighur Muslims, and the systematic suppression of free speech in Hong Kong. At the heart of these talks has been the EU's concern about these issues and how to enforce and arbitrate other parts of the agreement. It must be noted the same members of the European parliament have in the recent past passed resolutions condemning the use of forced labor in China must ratify the agreement. Also, America and the incoming Biden administration are far from happy about the EU-China comprehensive investment agreement which signifies a significant shift in EU policy towards Asia.

The proposed deal dovetails with Beijing's "One Belt, One Road" (OBOR) initiative and follows the signing of an agreement made with Italy which is viewed by many as bankrupt. Last year, in what might be considered a bold move the Italian Prime Minister signed a historic memorandum of understanding with Chinese President Xi Jinping in Rome. The agreement made Italy the first founding EU  member, and the first G-7 nation, to officially sign on to OBOR in hopes it would shore up its weak prospects. The ramifications flowing from Italy's deal with China may, in the end, prove to be a deal with the devil. 

The key motivation behind China working to reach a deal with poor, weak, but lovable Italy was its desire to exploit Italy and use it as a backdoor into the broader Euro-Zone market. The deal China and Italy inked contained development deals covering everything from port management, science and technology, e-commerce, and even soccer. The reality is that China is eager for control of entry points into the European Union that can be lawfully expanded upon. This does not bode well for the region.

While in the past, Europe has enjoyed a trade surplus with America year after year this has not been the case when it comes to China. According to data from Eurostat, the EU had a 153 billion euro ($180.3 billion) surplus with the U.S. (meaning it exported more to the U.S. than it imported) in 2019. The European Union is China's second-largest trading partner but imports far more from China than it imports. These sort of numbers are not outliers but certification of a trend that has been growing for years. Simply put America has been carrying Europe on its back and the money and wealth that flows from America to Europe quickly finds its way to Asia. 

Below are the import and export figures with China from 2018 in billions of US dollars.

 United States,  Total trade 583.3  Exports 429.7  Imports   153.9  Trade Deficit  275.8

 European Union,  Total Trade  573.08  Exports  375.1   Imports  197.9  Trade Deficit 177.1

It could be argued Brussels is leading the EU into an ambush, Europe cannot hold its own against China. In the past, both the United States and the European Union have complained that China wants free trade without playing fair. To think China is a tiger that has suddenly changed its stripes borders on insanity. This treaty will not correct the market imbalance or give Europe the same level of market access or non-discriminatory environment investors seek. They will find this is not the first time that China signs such an agreement without respecting it. Europe which has seen its manufacturing sector debased by cheap knockoffs from China and other low-wage countries will find little comfort in bringing more of these goods into their market.

It could be argued the Chinese system is geared to exploit. China's state-run economy is based on a predatory business model that is geared to expand by crushing the competition. China is determined to move into high-tech products and its plan centers around both state-owned and private firms investing in and acquiring foreign companies to steal their technological innovations. Subsidizing those companies working within its system in a multitude of ways helps China achieve this goal. This is not going to change, China exports goods at slightly below cost in order to draw manufacturing jobs from other countries. Those of us with such a view of China contend the move towards closer ties with China may hasten the demise of Europe.

Below are a few links to other article relating to China and the situations contained above.

Republishing this article is welcomed with reference to Bruce Wilds/AdvancingTime Blog

Monday, December 28, 2020

Inflation Expectations Solidly On The Rise

Expectations Can Drive Inflation
Inflation expectations appear to be solidly on the rise and that spells big problems for the financial system. For years the central banks across the world have claimed deflation has driven or allowed their QE policies to remain. This is central to their ability to stimulate. The moment inflation begins to take root or becomes apparent much of their flexibility in policy is lost. The 2% inflation target central banks have deemed optimum is not valid. This argument is becoming harder to make since many people now feel so much money pouring into the financial system is beginning to move inflation higher. 

Up until now, the law of diminishing returns has required larger and larger amounts of stimulus to be thrown at the financial system each time the economy begins to turn down. The continued appointment of dovish and easy money advocates to positions in high finance does little to reinforce confidence in the fiat currencies on which we rely. The rising value and interest in precious metals and cryptocurrencies such as bitcoin stand as evidence investors are seeking alternatives to the fiat currencies issued by nations and central banks.

At Some Point Inflation Will Raise Its Ugly Head

In the past, I have put forth the idea that inflation could rule the day even if central banks are unable to keep the wheels on the bus and the economy collapses. This powerful force of inflation coupled with slow economic growth is known as stagflation. Like inflation, it can devastate those improperly invested when it moves onto play. It is important to remember the cost of all commodities, goods, and services do not move at the same rate or even necessarily in the same direction. 

This means it is the overall rate of inflation we should be concerned about. Prices can rise for several reasons such as strong demand, a scarcity of goods, or even because of how things are taxed. Many people look at how much money or credit is being created as an indicator of what is to come. Of course, it is not just the amount of money but how fast it is moving through the economy that complicates currency expansion as a guide. This is known as the velocity of money which has been falling for years. 

I contend a large often overlooked contributor for this falling velocity is rooted in the growing inequality of wealth distribution. Simply put, as wealth matriculated to a smaller share of the population at the top, the money they acquired has been put into investments where it just sits. This drags down the overall speed at which money is moving throughout the system. If this is correct, a case can be made that when money starts to be reallocated and shifted to other investments the effect on inflation could be quite dramatic.

M2 the broader measure of the money supply has soared

By simply adding in the expectation that inflation is waiting in the wings to make a grand entrance a new threat is added to the financial system. Even investors beginning to shift towards assets that do well during times of inflation may be enough to set in motion a self-feeding loop or cycle. When fiat money that has quietly sat in paper promises begins to be exchanged for tangible assets and inflation hedges it will reverse the long falling velocity of money. 

Inflation puts a spotlight on the difference between liquidity and solvency. It also brings with it a slew of other issues such as higher interest rates which generally hit many sectors of the economy such as construction very hard. Higher interest rates also result in people having a difficult time paying for or financing big-ticket items such as automobiles and homes. In short, it puts a great deal of stress on all parts of the economy including the government deficits that have exploded since the 2008 financial crisis.

Two often-overlooked factors support the idea we are headed down a path of inflation rather than deflation. The first is many laws have been set in place to raise the minimum wage. The second is the fact is so many Americans work for the government. These are mostly full time and workers seldom get laid-off without pay. Figures from the National Debt Clock show just under 150 million workers are in the workforce and nearly 24 million of them are employed by the government. That is almost one in six.

As for the potential for deflation taking hold when defaults rise as debt becomes unsustainable, this is far less likely than in the past. This is because several safety valves have been put into the system over the years. These are evident in the way bankruptcies take place, companies are now factoring in more bad debt in their price structure and last but not least an attitude governments and central banks should step in and save large businesses and institutions in danger of failure. 

The government's oversized role in today's economy which is much larger than it was during the Great Depression tends to put a net under the ability of prices to fall. Many people see this as a good thing but it has also led to the perpetual zombification of problems that artificially low-interest rates will not solve. Masking the fact many companies and pension funds are insolvent does not garner a strong economy.  

The massive growth in negative-yielding debt across the globe has reached a record $18 trillion. This effort to extend the pretense the growth in debt can be sustained has been led by the euro-zone and Japan, is not a sign of confidence, but rather a huge risk of secular stagnation. The chickens may soon come home to roost is an old saying that means, you cannot escape the consequences and repercussions of your actions. In this case, when applied to the Fed and other central banks it means they have put the world's financial system in a precarious position.

The policy of Modern Monetary Theory has failed in places like Venezuela and Argentina. In these countries, “money for the people” policies have-resulted in rampant inflation. While these small countries have little effect on the overall global financial system, the Fed does and it has massively increased the US M1 money supply. In the last two weeks of November, the M1 money supply jumped by over 14%. This would constitute an annualized rate of 367%. More important is this has allowed the other major central banks to follow suit and increase their money supply without debasing their currencies.

While the blame for this is being solidly placed on the back of Covid-19, it could be argued the financial system and the economy has been skating on thin ice for over a decade. This is not the first time the Fed and other central banks have been forced to pony up liquidity in an effort to shore up a sagging stock market. The oversized deficits governments have been running are also a sign all is not well. As far as returning to what many people see as normalcy, that seems to be a mirage that continues to move away every time we think we are getting closer.

Across the globe, the growth in the money supply, paper promises, and credit has far outpaced the growth in tangible assets. This includes pensions and a slew of other unsustainable Ponzi scheme like investments. Instead of stimulating economic activity, the current expansion in the money supply has the strong potential to unleash inflation across the globe. If this happens, far more countries will slip into hyperinflation than in the past. Restoring faith in fiat money following such an event will be painful and difficult. 

  Republishing this article is permitted with reference to Bruce Wilds/AdvancingTime Blog

Friday, December 25, 2020

May This Year Bring Less Gifts and Far More Christmas

Even The Grinch Knows This
May this year bring to all more Christmas and less of the junk we have all come to know as gift giving. This time of year I find the mind-numbing barrage from stuff that peddlers are rushing to fill any need I can imagine overwhelming. These needs appear to be both real and imagined, I'm even asked to reach out and consider, and speculate, on the needs and desires that others might have. Over the years our lives have become so crammed with material goods, our drawers and closets are now chucked full of the trendy apparel of last season, exercise equipment, knick-knacks, and electronic equipment. For some people, the place where they live is about to explode unless they move to a larger house or rent a storage unit. 

Many garages across America are so full of this stuff cars can no-longer be parked inside. Neurotic people with overactive pack-rat syndrome literally destroy their quality of life with clutter and junk. This stuff will often sit in one place for years while they can’t find a chair to sit in or a clean tabletop on which to eat. Ads like - "get it all" or "have it all," live on the cutting edge, buy all of these high-powered models, and "put your life in the zone." fill our lives. This new-fangled electronic gizmo does it all and more, look at the artwork, let it wash over you, surround you, and cover you up. Check out that car, is it not perfect? Wouldn’t driving it make life a zen-like experience - got to have it, no payment for 90 days.

This has resulted in consumers getting caught up in the game of finding the perfect patio furniture and buying it to use it twice. It then sits on our deck only to fade in the sun over the next three years. Never before has man had so much, but it's far from enough. The idea things will be “swell" and life downright peachy only after you fill it with the right kind of stuff is a slippery slope. The fact is for some people they will never be able to get enough. The one thing we can count on is that tomorrow the new models arrive, better and sleeker with even more options!

Great are the efforts we make to fill our needs with material objects in an effort to achieve happiness. We rush around creating video and digital images in a desire to preserve those precious moments. We capture so many images that we forget to download, view, and print them. We now have the ability to collect and store vast quantities of information and data, much of which is never processed or utilized. Poor quality or obsolete data entered into our system downgrades the output to one of, "garbage in - garbage out."    

It seems the ads filling our Sunday paper and mailboxes weighs ten pounds, the ads, the ads, the ads. What store is that? Never heard of it? They are all the same, junk, junk, junk, buy me some happiness!! It is only natural to be drawn to nice things but new is merely a point in time and not a reflection on quality or utility value. We have so much junk we can’t find the item we need or want, so we are forced to buy a replacement until we find where it was placed. You know it’s true – yes, you are guilty, so are we all.

The fact there is a lot more to life than stuffing your face with to much food and running around trying to find things to buy. This is made clear by the picture appearing to the right. Life is about more than buying and spending. So many people are not as fortunate as we that have been born in America and we should count our blessings and good fortune. When all is said and done it is more likely the most precious moments in our lives will center around people rather than things. We should never forget that trying to do the right thing for our fellow man is an important part of being alive.

We have even been convinced that we should not leave our house or office without a bottle of water, if it were not for bottled water, we would all be dead. Bottled water was a three hundred billion dollar industry last year. Oh, how our needs have grown. Well, all I really need is a lamp, an ashtray and well maybe a yogurt maker. That’ all I need! Using a line by the songwriter-singer Jimmy Buffet, I want to go where the women and water are free. All this means that for many of us it is time to take a deep breath and forget about material things. This might make a lot more room for us to remember what is really important, people and family.

Merry Christmas to All!!

 Republishing of this article is welcomed with reference to Bruce Wilds/AdvancingTime Blog

Tuesday, December 22, 2020

Before Long "They" May Take Away Your Right To Drive

With all the things that are going on would it surprise you that before long the government may take away your right to drive. While this may sound absurd, please bear with me. For years in my state, a question that is on every driver's test is, Is driving a right or a privilege?  Of course, the answer is, it is a privilege. If you ask the Department of Motor Vehicles (DMV) in your state expect them to agree. Driving isn’t something just anyone can do. Not legally anyway. It’s a privilege that’s earned by showing you have the skills and knowledge to drive safely.

Sorry, This Car Only Comes As A Self-driver
The point they want to make it clear is that you know driving is a privilege and something they can take away from you. To most Americans who have grown up with an automobile, the idea may sound foreign or strange but within a few years, only a small percentage of us may be allowed to own or operate a vehicle. I'm not predicting this will happen overnight but it is something that is likely to unfold over three to seven years as big tech slowly tightens the screw and asserts more control over our lives.

After only a few months of living in a Covid-19 world, it has become clear those in charge can change the rules in a blink of an eye. The idea the world is moving in the direction of removing this so-called privilege started to emerge just a few years ago. Now several trends are rapidly coming together which makes this much more probable, a few are listed below. 

   * self-driving vehicle technology is rapidly improving 

   * People are becoming more comfortable with the idea of car sharing  

   * Many people cannot afford an automobile

   * Central banks are rapidly moving into social engineering and fighting climate change

   * Several companies have floated the idea of developing fleets of robo-taxis  

Just the other day Apple threw its hat into the ring when it announced its intention to move forward with developing self-driving car technology.  According to Reuters, Apple is targeting 2024 to produce a passenger vehicle. Make no mistake, this has the potential to derail Elon Musk's plan for Tesla to put out a million robotaxis. This places Apple in the position of competing with others with major self-driving projects, including Tesla and Google/Alphabet's Waymo project which stands for a new way forward in mobility.

Adding to the validity that Apple is serious about moving in this direction, Reuters also reported Apple's cars might include sensors and a new "monocell designed battery" that has been developed internally at Apple. Such a battery could be a much-needed breakthrough in battery technology. The lack of better batteries is one of the biggest problems currently facing the EV industry. A new battery design that could "radically" reduce battery cost and increase a vehicle's range. A better battery has been seen as the holy grail of the EV industry.

And It's Gone
As to how "they" might remove your driving privileges, the answer is, slowly at first then rapidly after they reach a certain point. Simply by raising the cost of owning and operating a vehicle they can dent the number of people desiring to drive. This can be done by raising the price and requirements to get and maintain a driver's license or hiking fees and excise taxes on various types of vehicles. Making the claim this new technology is much safer we might see insurance rates for individuals skyrocket compared to those paid for autonomous vehicles. 

They could also ban human-operated vehicles from entering certain areas. Another way to choke off our desire to own and operate a vehicle is to sever our ability to get fuel or parts by making them either more expensive or impossible to get. One or all of these tools would substantially reduce the desire to drive for many people. Remember this is about those in power being able to assert their power over the masses. This can be tied to a narrative that it is being done for the greater good and the claim it will massively reduce climate change by cutting waste and making society more efficient.

While some of you may have a difficult time imagining a world in which you would be totally dependent on a self-driving vehicle to get around, the writing is already on the wall. Even at the early stage of their development, some carmakers are already suggesting or claiming that self-driving vehicles will reduce accidents to nearly zero and save thousands of lives each year. The problem is many people enjoy driving and the freedom that comes with it. Some of us have absolutely no desire to own a self-driving car. 

In the world I have described, only the rich and powerful would have a car and be granted the privilege to drive them. For those of you that doubt this could happen or be the goal of our new masters, I remind you few people would have ever predicted many of the Orwellian tactics governments across the world have used to squelch this pandemic that has killed far fewer people than originally predicted.

Republishing of this article is welcomed with reference to Bruce Wilds/AdvancingTime Blog