How I’d Sell Buffett on Crypto The American Bolsheviks Are Coming…
By Selva Freigedo in Albert Park Savers are getting screwed. After leaving interest rates stuck at 1.50% for years, the Reserve Bank of Australia cut interest rates last week to 1.25%, a new all-time low. Now there is speculation on if banks will pass on the full rate. From the Australian Financial Review (AFR): ‘Savers collectively will be $1.3 billion worse off if banks pass on the full 25-basis-point cut to at-call cash accounts – and face even more pain as economists forecast further cuts by the end of the year. ‘AMP, Suncorp, Bendigo and Adelaide Bank, Bank Australia and others have already hit customers with cuts to interest rates for at-call cash accounts of between 7 bps and 30 bps, according to research house Canstar.’ Rate cuts are good news for people with a mortgage. But they are bad news for savers. Yep, no surprise there. It’s damaging for people in retirement or looking to increase their savings, and therefore counting on interest payments for this. The AFR estimates that more than 80% of savings accounts are already facing real negative rates. That is, the interest rate you get in the bank is lower than inflation. In other words, by keeping money in the bank you are losing money. It’s no surprise then that the savings rate is plummeting. The thing with banks offering a low interest rate, means people move money onto more risky plays in the hopes or getting better returns. But riskier plays mean more risk, too. The hope is that the recent rate cut will help the economy. That lower property prices and low interest rates will stop the property decline and incite more borrowing. ..............................Advertisement.............................. | Australia is celebrating 28 years recession free… But that success might represent a dark future The Australian housing market is falling at GFC speed… Household debt is 189% of our income… The banks are panicking after the Royal Commission… Find all the details right here | .......................................................................... |
But let me tell you, I think that ship has sailed. Unless banks increase lending again also, we won’t see anything in property like we have seen in recent years. And it doesn’t look like banks are ready to open the credit tap anytime soon as they see risks increasing. Lower interest rates aren’t great for banks either, it affects banks profitability. We have seen what low interest rates have done to banks in Europe. Banks all over Europe are struggling with low profits and dwindling deposit levels. The thing is, Australia’s banks are quite vital to the economy. The other issue is that consumers are tapped out. Consumption makes up about 60% of the economy. Salaries aren’t growing. Savings are decreasing and costs are increasing. And we are up to our eyeballs in debt, with household debt to GDP at a whopping 120%. Much of that debt has gone into mortgages to pay for increasing property prices. Now all that debt will need to be repaid at some point in the future. And with no wage growth, it means that consumption will take a hit. In fact, it already is. This from News.com.au: ‘The Australian economy has been dealt another blow with a leading business survey declaring the retail sector is “clearly in recession”. ‘The data from major bank NAB comes a week after the Reserve Bank was forced to cut interest rates to its lowest level in history and Australian Bureau of Statistics data showed the economy had slowed to its weakest level since the global financial crisis in 2009. ‘In figures released today, the NAB index of business conditions dropped two points in May, leaving it well below the long-run average. ‘Speaking on the NAB Economics podcast, NAB group chief economist Alan Oster agreed with the proposition that the Australian retail sector was now “GFC-level terrible”.’ We have seen a lot of stimulus in recent years, and continue to see it. The stimulus is supposed to make up for decreasing demand as mortgages and increasing costs take a bigger chunk of people’s salaries. You can keep on stimulus going all you want but with consumer debt at a high, demand will stagnate, and things will slow. There is so much debt consumers can take on with salaries not increasing. We have seen increases in property prices, increases in household debt, but not much of an uptick in business investment. My point is, the longer stimulus goes, the less effective it is. Best, Selva Freigedo, Editor, Markets & Money PS: He predicted Japan’s collapse in 1989…the dot com bubble burst…and the US subprime crisis. All before it happened. Now once again Harry Dent is sounding the alarm. Our zero hour is approaching quick, and no one saw it coming. To find out more about Harry’s prediction click here. ..............................Advertisement.............................. | Get ready for... | THE 5G INVASION | It’s set to be the most disruptive tech advancement to arrive in Australia in 27 years... And I believe it could help you to QUADRUPLE-your-money stock gains starting as soon as 30 June Full story HERE |
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How I’d Sell Buffett on Crypto By Harje Ronngard Invaluable. That’s what time is worth to the 88-year-old Warren Buffett. Though, he does auction it off from time to time. Each year, anyone can bid for a three-hour lunch with the Oracle. And each year, the value of Warren’s time goes up. In 2000, a three-hour lunch with Warren cost US$25,000. In 2010, someone bid US$2.6 million for the same three hours. This year, the winning bid was US$4.6 million. A three-hour lunch with Warren was worth US$4.6 million to someone… That someone was crypto tycoon, Justin Sun. And he plans to change Warren’s mind on crypto. Buffett doesn’t have the right sources God knows, Justin has his work cut out for him. Rat poison squared…that’s what Buffett thinks of bitcoin and the like. It’s not hard to see why he thinks that way, either. The media portrays everyone in cryptos as shady gambling-addicted youths that would throw their lives away for a bit of extra coin. I’m sure those kinds of people do exist. And those purely speculating on prices have their days numbered. Those over at Guru Focus think this $4.6 million lunch might be all just a big waste of time. ‘Buffett is fundamentally still a value guy,’ Guru Focus penned. ‘If Sun thinks he can speak to Buffett as if he gives a hoot about money-losing “growth” stocks and other such ephemera, he is sorely mistaken. The Oracle of Omaha is not going to buy into the crypto story anytime soon. It is fundamentally not an investment asset, but a tool of speculation. That has never been — nor likely ever will be — his style.’ But there’s a whole other movement — a large group of enthusiasts that believe crypto and blockchain could be something more…a solution to problems within our financial system, perhaps… This is what I expect the ever-respectful Justin wants to communicate to Warren. In a CNBC interview with Becky Quick, Justin said, ‘Warren Buffett doesn’t have the right sources for the blockchain industry, news and he’s misled by the media most of the time.’ Maybe it will be Justin who creates that bridge. A bridge between the traditional investor and the crypto world? Warren did say he was ‘delighted’ that Justin won the lunch. I’m sure he’ll also have an open mind for the three hours. But maybe Guru Focus is right. Maybe three hours is just not enough time. If it was me, though, I’d try and emphasise problems close to Warren’s heart, and explain how cryptos could be the solution, not just prices to trade. How I’d change Warren’s mind… Warren is not a man of change. He’s a card-carrying capitalist. But the investments he looks for are anti-capitalist. He likes strong businesses, with powerful cash-generating abilities and an immunity to competition. So, trying to sell Warren on new groundbreaking technology, with change right around the corner, probably won’t work. But, what might work is talking about something Warren is passionate about… While Warren is a capitalist, his political views are close to market socialism. In a country as well off as the US, Warren thinks it’s crazy for anyone to be left behind. So welfare, taking care of those who cannot take care of themselves, is a big one for Buffett. He’s also voiced his concerns on the wealth inequality, saying something’s got to be done about this issue. I’m sure Mr Buffett knows, the rich get richer and the poor stagnate because of central and commercial banks. It’s the central banks that pump boat-loads of money into the financial system, causing asset prices to rise (a lot of which is owned by the rich). Then it’s the commercial banks who keep the poor poor by charging compounding interest, offering no-fee refinancing and generally keeping the working class in debt. The solution to all this, perhaps…is crypto and blockchain. A step in the right direction maybe…? If one of the problems is central banks and their careless money printing, why not create a digital currency, backed by commodities, which would create fewer boom/bust cycles in the financial system? This was actually an idea that Warren’s mentor, Ben Graham, developed back in the 1930s (sans crypto). Here’s how it could work… When commodities prices are cheap, central banks could issue commodity-backed tokens to buy baskets of commodities. This would give producers cash, even as demand reduced. Then, as commodity prices rose, the central bank could redeem these tokens by selling down their inventory and damping irrational exuberance. The ultimate goal is to get money in the hands of producers, even when prices are low. And with that cash, producers can then pay suppliers, workers and continue to invest. Of course, it’s not foolproof. But it does reduce the amount of cash central banks pump into financial assets, and may reduce the amount of debt that commercial banks shovel onto the average Joe… Something Warren may consider being a step in the right direction… Your friend, Harje Ronngard, For, Markets & Money ..............................Advertisement.............................. | REVEALED: The REAL reason Elon Musk was smoking weed on the Joe Rogan podcast It might SHOCK you. But it could also make you stock gains up to 349%...right up to 1,264% (or more). | | Source: Millennium Post | Click here for all the juicy details. |
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The American Bolsheviks Are Coming… By Bill Bonner in Yougal, Ireland It’s coming. It’s happening. Our dark fears and midnight tremors are coming to life. In the broad daylight. The Bolsheviks are invading the suburbs and cities…and even the Corn Belt…all across America. American Jackassery Both Democrats and Republicans are turning to three-part programs — one part Soviet economic claptrap, one part Mussolini’s political bamboozle, and one part pure American jackassery. Today, we begin the hard work of giving them the mockery they deserve. We only worry that we will run out of scorn and sarcasm before we are finished. Politics is always and everywhere the enemy of civilization. It is the enemy, too, of economic progress. Most important, it is the enemy of dignity and clear thinking. And now, from cannon in front of us…from cannon to the left of us and cannon to the right…from all directions, politics thunders in all its sordid glory. Many will want to blame Donald Trump. It was he who brought politics front and centre in economics, trade, immigration, and monetary policy. Rarely had a US president intervened so directly in the affairs of ordinary businesses and consumers. He cut taxes for some…and raised them for others. He started trade wars with Canada, Europe, Mexico, and China; on his own say-so, he raised prices on imports for all Americans. The Fed is supposed to be independent of politics, but the president told Jay Powell to stop ‘normalizing’ rates…and the Fed obeyed. And this past weekend, he went further, suggesting that even farming should be brought under his control. The soggy Corn Belt must have felt a ray of sunshine on Saturday as it learned that the US president had made a great deal on behalf of our ‘patriot farmers’ with Mexico. How the president got in the business of selling corn, we don’t know. Nor do we know why farmers are any more patriotic than plumbers or insurance salesmen. Perhaps it is because they provide us with food to eat? But what kind of patriot takes food away from Americans and sells it to foreigners at a higher price? And what kind of president willfully raises food prices? Every penny the farmers get in extra income by selling to foreigners, the natives will pay in higher food prices. How is the nation better off? Colourful Banners Who cares? It’s about power, not economics. Ambitious politicians want to control everything. Typically, they come up with colourful banners…fabulous new Programs…Five-Year Plans and 1,000-year Reichs. In the Soviet Union, Stalin went so far as to dictate how land would be farmed (collectivism) and how and when the seeds should be planted (Lysenkoism). Attracted to the nutty theories of agronomist Trofim Lysenko, Stalin had the farmers converting winter wheat to spring wheat by planting soaked seeds directly in the snow cover. Sometimes it worked. Often it didn’t. But Stalin never went hungry. Trump has his crackpots, too — notably his top man on trade, Peter Navarro — from whom he has drawn inspiration and quackery. Navarro encouraged the president to go to battle with the Chinese. But on Monday, speaking to CNBC, Trump admired his adversary: ‘Don’t forget, the head of the Fed in China is President Xi. He’s the president of China. […] He can do whatever he wants. They devalue, they loosen or you would just say they pump a lot of money into China, and it nullifies to an extent, not fully, it nullifies the tariffs.’ How would a president know when to ‘devalue’ the people’s money…or when to loosen monetary policy? How would anyone know? But one constant feature of the politicised economy is a lack of question marks. Politicians have no idea how an economy works and don’t really care. And the more control they have, the poorer people become. Man With the Plan Price fixing doesn’t work. Central planning doesn’t work. Stimulus doesn’t work. Never did. Never will. But politically, in a late, degenerate empire, the ‘man with the plan’ grows bolder. For nearly half a century, the feds have twisted and corrupted the economy…with fake money and fake price signals (mostly interest rates). This has nurtured a grotesque, disfigured capitalism where the average American hasn’t had a raise in 45 years…but where the rich and powerful have gained approximately $50 trillion of illegitimate wealth (our estimate). This corrupted elite now dominates the White House, Congress, the bureaucracy, the universities, the military, the press, and major industries. And they use their influence to make sure real capitalism is suppressed. Instead of dynamic, creative destruction, old, zombie companies are kept alive on EZ money. Managers discover that it is safer and more profitable to borrow money and buy their own stock than to undertake risky, long-term new ventures. Kids discover that it is better to stay in school with more and more student debt than to venture out in the real world and have to pay it. And old people realise that they want the feds to protect them from everything — disease, poverty, infirmity, terrorism, Mexicans, and BMWs — and life expectancies fall. GDP growth rates have sunk to just half of what they were in the last century. Savings rates are near all-time lows, too, as savers are systematically penalized with low rates and inflation. And debt grows twice as fast as output…with no end in sight, dooming the whole system to a catastrophic collapse. Cometh the hour…cometh the numbskull. And here cometh Elizabeth Warren, with her own bombs and BS…promising to out-Trump Trump. More to come tomorrow… Regards, Bill Bonner ..............................Advertisement.............................. | Every country on Earth could be about to pay through the nose for this critical, natural resource… But act quickly and decisively and soaring prices for this mineral could potentially make you a bucket-load in 2019. | | Source: grandcanyontrust.org
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