Posts by Marc Nonnenkamp

Financial, Economic and Social Mood Update (March 1, 2017) The nominal stock market is demonstrating amazing robustness. The Dow Jones 30 Industrials Index hit an all-time record high value of 21,162 on March 1, 2017. The Wilshire 5000 Index (which includes all publicly listed corporations in the USA) hit an all-time record high value of 25,009 on the same date. But the “real” value of money is much more significant than its nominal value or denomination. In terms of the value of gold bullion (the only true global “currency” or medium of financial exchange), the US Dollar has lost a whopping 64 percent of its purchasing power since 1999 or 18 years ago. By comparison, one of the worst economies on earth today (Venezuela) has seen the “real” value of its national stock market crash by 76 percent in the 10 years since 2007. By this assessment, the USA is not that much ahead of Venezuela. The US Dollar will have to be devalued in the very near future. The USA is seeking a more level playing field especially with regard to both Mainland China and Japan, and the USA will have to become more competitive vis-a-vis exporter nations if good manufacturing jobs are to return to the USA. The rumored near term devaluation of the US Dollar will be in the neighborhood of 2 or 3 to one. In other words, the nominal cost of imported goods and services in the USA will increase by two to three fold compared to now. What is today the USA reached the relative height of its per capita prosperity in the year 1739, or 278 years ago. After the American Revolutionary War ended in 1783, the 13 American states were among the wealthiest political jurisdictions in the entire world – equivalent to…

The big date was January 20, 2017 – the inauguration of Donald J. Trump as the 45th President of the United States (POTUS). This marked not merely a changing of the administration in the USA, but more importantly a key element in the overturning of the existing global power structure going back at least to 1944. The main source of power in the world is the “creation” of money. The respective central or national banks of the world perform this all important function, and certain central banks are more important than others. Those which come to mind today include the central banks of the USA (the Federal Reserve System), the UK (the Bank of England), the EU (the European or German Central Bank in Frankfurt), Switzerland, Japan and the much newer BRICS bloc. “BRICS” stands for Brazil, Russia, India, China and South Africa. Above the central banking system of individual countries or “supra national” states such as the EU, NAFTA and BRICS are organizations of global reach such as the World Bank and the IMF (International Monetary Fund). The most important newer such organization is the AIIB (Asian Infrastructure Investment Bank) which is led by Mainland China. China by herself has 17.9 percent of global GDP today, but more importantly the 100 plus member countries of the AIIB (by no means confined to Asia) control almost 80 percent of global GDP in 2017. The USA has a mere 15.6 percent of global GDP today compared to 50 percent in 1945. The USA has a mere 10 percent of the global vehicle industry in 2017 compared to 92 percent 70 years ago in 1947. The USA and its closest financial allies (mainly Japan) control less than 20 percent of global GDP in 2017. These are the important numbers – almost 80…

Financial, Economic and Social Mood Update (January 1, 2017) So-called “liberal” and left-wing governments are in a broad retreat all over the world. Even Vice President Joe Biden of the USA said in December 2016 that Germany and Canada are the last two major (i.e., most powerful and most affluent) government stalwarts of this so-called grouping. The much anticipated and long awaited “Global Economic Reset” (actually a global currency reset which determines the ranking of worldwide reserve currencies held by central banks, commercial banks, investment banks, corporations and individuals) is upon us at the start of the year A.D. 2017. The baton has been held by the US Dollar since it overtook the GBP British Pound Sterling in 1944. The “Special Drawing Rights” (SDR) held by the IMF, World Bank and other supra national quasi-public sector central banks is about to shift and give the number one position to the BRICS countries (Brazil, Russia, India, China and South Africa) which have surpassed the US economy in terms of size of GDP (Gross Domestic Product). The most important of the 5 BRICS countries is Mainland China, and its new OBOR (One Belt, One Road) grouping will actually become even more important than BRICS. OBOR is comprised of 64 countries which together have 60 percent of the world population and 40 percent of global GDP……………………..much larger than the USA, NAFTA or the EU. What does this mean? As I have continually said especially when talking about “debt” (not just conventional “debt,” but unfunded liabilities and contingent liabilities as well) it will translate into relative devaluations of the Japanese Yen, the EU Euro and most especially of the US Dollar. Americans will feel this as their incomes remain frozen and as their cost of living will skyrocket many fold. The foreign exchange market…

Financial, Economic and Social Mood Update (December 1, 2016) The Dow Jones 30 Industrials Index reached a new record nominal high of 19,225 on November 30, 2016. It will likely rise to about 20,000 before crashing in a very major way. The global bond market has already commenced its decline, and the currency markets have become much more active (and volatile) as well. The US Dollar is the ultimate global bubble and will likely be the final market to collapse to the ground – after the collapse of the bond, stock, commodity, real property and consumer products markets. On November 8, 2016 the USA partook in the massive populist wave which is encompassing much of the world by electing the political outsider Donald J. Trump to be the 45th President of these United States. Examples of similar populist politics can be seen in Europe – in the UK vote to leave the European Union, in Hungary (95 percent of the Hungarian electorate rejecting the EU policy of open immigration from the Islamic countries), in Poland, Moldova, Ukraine and the Baltic countries (nationalist governments less than friendly toward Russia), in Russia itself (suffering under western economic sanctions but 80 percent in favor of President Vladimir Putin), and in numerous other European countries where nationalist parties are upsetting the post-World War 2 balance of power (in the Netherlands, Belgium, France, Italy, Germany and the 5 countries of Scandinavia). Populism & nationalism are also evident in Asia – in the Philippines (the new “tilt” toward China & Russia, the huge war on illegal drugs), in China (leading the most massive economic charge in history to develop Eurasia), in Japan (she has the 4th largest navy on earth), in Iran (asserting her power in the Persian Gulf and the Middle East), in Turkey (seeking…

Financial, Economic and Social Mood Update (November 1, 2016) The Dow Jones 30 Industrials Index reached a new nominal high value on August 15, 2016 and this record is still in place – the index remains about 800 points below the record as of November 1, 2016. There is a need to rise above the chatter and the nonsense of the body politic in much of the world and assess where we now are and where we are going in the near future. Much (but not all) of the formerly industrialized world is in decline – this is evident in the per capita GDP rankings which I discussed in last month’s update. The USA is on the cusp of becoming a de facto Third World country. The overwhelming majority of Americans are recipients or so-called “beneficiaries” of a massive socialist welfare state. They are being supported or held up by a tiny minority of Americans who still support the US economy financially, by artificially low interest rates, by artificially high bond prices, by artificially high corporate stock prices, and by an artificially highly valued US Dollar which is still the number one global reserve currency since 1944. None of this will endure much longer. Most of the inland US states already resemble a Third World country – income levels, demographic implosion and real property values (or the lack thereof) reflect this fact. Canada is considerably more affluent and better off than the USA on a per capita basis. Much of Latin America is something of a global backwater – it does not partake in the economic boom currently enveloping much of Asia and Africa. Mainland China has become and will continue to become the ancient global superpower which she used to be. Much of Asia, Africa, the former USSR, Europe…

Financial, Economic and Social Mood Update (October 1, 2016) The Dow Jones 30 Industrial Index and the S&P 500 Index both made new record nominal highs on August 15, 2016. Our world is constantly in a state of change. Where is it going right now – where do its leaders want it to go, where do its people want it to go, and is there a difference between the two? The infamous “leaders” at the top of the so-called “New World Order” have been pushing for more supra-national governmental organizations and ultimately for a one-world government. They seek less democracy, more uniformity, more government bureaucracy, more socialism for the masses, the elimination of the middle class and more privilege and power for an extremely tiny upper class, i.e., for themselves. Socialism and government welfare benefit programs are a means of “dumbing down” the masses, to make them dependent upon the leadership and to prevent them from altering their social status, i.e. from advancing into the middle class and ultimately into the upper class. The first attempt at global government came in the form of the League of Nations after World War One in 1918. The impetus for this body was to prevent another destructive world war. It obviously failed in that attempt, and since the end of World War Two in 1945 it has been replaced by the United Nations – much more enduring than the League of Nations, but limited in its effectiveness. The most advanced form of a regional supra-national government has been the European Union, which has created an entirely new level of government bureaucracy complete with policy-making authority, a supra-national parliament in Strassburg (French spelling = Strasbourg) and a vast central authority in Brussels. The impetus behind the EU was, once again, to avoid destructive wars…

Financial, Economic and Social Mood Update (September 4, 2016) The Dow Jones 30 Industrial Index and the S&P 500 Index both made new record nominal highs on August 15, 2016. The global bond market is on the cusp of what will likely be its most massive crash in recorded history – interest rates and yields are at artificially low levels (about 30 percent of global sovereign debt is actually trading at negative yields) and the next major historical wave should take interest rates in the industrialized world beyond levels last seen in 1981 and 1982 – in other words, well into double digits. The largest monetary investment in recorded human history is now actively being led from Mainland China. The Chinese refer to this as the “Silk Road” and/or as the “One Belt, one Road” project. The money committed thus far equals US $1.4 TRILLION, involving 64 member countries (mostly in East Asia, South Asia, Central Asia, the former USSR, and in Europe) with 40 percent of world GDP and 60 percent of the global human population. China is busy building roads, high speed rail networks, deep water shipping ports, and transportation pipelines for crude oil and natural gas which lead from 63 other countries into China. China itself already ranks number one in population (19 percent of the world total) and number one in PPP GDP (18 percent of the world total ahead of either the EU or the USA). China is the number one manufacturing nation in the world – fully half of all physical goods produced in the world today come from Mainland China. All of this is the fruit of the change in Chinese leadership which took place in 1976. China’s next major geopolitical goal is to change or to replace the Bretton Woods system which…