‘China’s financial system could collapse’: What the Reserve Bank’s Evergrande bombshell means for Australia – ABC News

https://www.abc.net.au/news/2021-10-08/chinese-property-evergrande-collapse-damage-in-australia/100521564

… “If they act too quickly in addressing these

vulnerabilities, confidence in the implicit guarantees that underpin much of China’s financial system could collapse, which would lead to

financial distress,” the RBA says.

“In contrast, if they act too slowly, the probability of more severe financial stress in the future will increase.

“Continued bailouts also risk further entrenching perceptions of implicit guarantees.”…

The Market Crash Nobody Thinks Is Possible Is Coming, by Charles Hugh Smith | STRAIGHT LINE LOGIC

https://straightlinelogic.com/2021/09/29/the-market-crash-nobody-thinks-is-possible-is-coming-by-charles-hugh-smith/

Charles Hugh Smith foresees a thunderous crash and believes the stock market has already topped out. SLL isn’t arguing with him. From Smith at oftwominds.com:

The banquet of consequences is being served, and risk-off crashes are, like revenge, best served cold.

The ideal setup for a crash is a consensus that a crash is impossible–in other words, just like the present: sure, there are carefully measured murmurings about a “correction” but nobody with anything to lose in the way of public credibility is calling for an honest-to-goodness crash, a real crash, not a wimpy, limp-wristed dip that will immediately be bought.

What I’m calling for is a rip your face off, weeping bitter tears over the grave of the speculative wealth that you thought was forever crash.All those buying the dipbecause the Fed will never let the market go down will be crushed like scurrying cockroaches and all those trying to rotate into the next hot sector or asset class will also be crushed like scurrying cockroaches because when the Everything Bubble pops, well, everything pops. There is no shelter in a risk-off cascade.

The crash is coming as a result of multiple mutually reinforcing dynamics, the first being that no “serious person” believes a crash is possible, much less imminent. In no particular order, here are a raft of other causally consequential triggers of a cascading market crash:

1. As I noted in my call for the top, Is Anyone Willing to Call the Top of the Everything Bubble?(September 6, 2021), there is no history to support the widespread confidence that the extremes of over-valuation, leverage, euphoria and speculation last forever, or even much longer than the lifespan of a cockroach. We’re well past that benchmark into unprecedented insanity. So what happens next: squish.

Just for the record, the Dow topped out on August 13, the S&P 500 topped out on September 2 and the Nasdaq topped out the day after my call, September 7. (Close enough for gummit work…)

Continue reading→

The U.S. Government Vows to “Fix” the Food System, by Bill Bonner | STRAIGHT LINE LOGIC

https://straightlinelogic.com/2021/09/27/the-u-s-government-vows-to-fix-the-food-system-by-bill-bonner/

Like they’ve fixed the educational and medical systems, and turned everything else they’ve touched into crap. From Bill Bonner at rogueeconomics.com:

BALTIMORE, MARYLAND – Things go wrong.

The Wall Street Journalpublished this alert last night:

Democratic leaders are trying to shepherd two complicated legislative packages: a roughly $1 trillion bipartisan infrastructure bill and a sprawling healthcare, education and climate package whose proposed $3.5 trillion price tag and contents are still under intense debate within the party.

At the same time, the government’s funding is set to expire at 12:01 a.m. on Friday, Oct. 1, which would partially shut down the government if Congress doesn’t act. Lawmakers also are feuding over who is responsible for raising the debt limit and avoiding a potentially catastrophic default. Absent swift action, Treasury Secretary Janet Yellen notified Congress this month that the Treasury may be unable to keep paying all of the government’s bills on time during October.

Reuters calls it a “moment of truth” for Congress.

Politicians grandstand. They argue and point the finger at each other.

But if the spending is interrupted, it won’t be interrupted for long. The real truth is that Democrats and Republicans agree on the important issue – that the rip-off of the American public must go on.

Borrow… spend… print… and borrow more.

Eventually, the end of the world as we have known itcomes. And then, things get serious. Painful. Chaotic. And disastrous.

Empty Stomachs

And today, we look at one of the most nightmarish features of the End of the World As We Have Known It: hunger.

It is hard to imagine widespread hunger in the U.S. The country is so rich, so big, so productive… food is so plentiful… and its people are so fat. What could possibly go so wrong as to cause people to go hungry?

Evergrande: Shares in cash-strapped China property giant plunge – BBC News

Comment by tonytran2015: Any overpriced enterprise in heavy debt may go bankrupt suddenly leaving its investors, creditors and employees with heavy losses.

https://www.bbc.com/news/business-58540939

… The firm said it is struggling to sell assets fast enough to service its massive $305bn (£220bn) of debts…

World could face disastrous financial crisis in 2023 on same scale as devastating 2008-2009 economic crash – Russian central bank — RT Russia & Former Soviet Union

https://www.rt.com/russia/533877-central-bank-financial-crisis-2023/

The world might face a financial disaster comparable with the
2008–2009 crisis because of problems accumulated over the last 18
months, which are a byproduct of measures implemented by governments to
battle the spread of Covid-19.
That’s according to the
Central Bank of Russia, which published a Monetary Policy Guidelines
draft report on Wednesday. According to the institution, the world
economy could enter a crisis scenario due to both the increase of global
debt held by countries and the increasing number of companies with weak
financial soundness.

According to the draft, the bank has
developed four separate scenarios for the near future, up to 2024.
According to its so-called ‘baseline’ scenario, a recession is avoided
as countries achieve their vaccine targets and advanced economies shift
toward monetary policy normalization.



Also on rt.com
IMF transfer pushes Russia’s international reserves to historic high

However, the other three possible scenarios paint a decidedly
grimmer picture. In the first instance, the pandemic worsens
significantly causing an economic crash worldwide. In the second, the
pandemic improves, but problems accumulated over the pandemic
deteriorate the economic situation considerably causing a rise in
inflation. In the third, monetary policy normalization by advanced
economies is accompanied by unsteady dynamics in financial markets,
causing a lack of confidence in investors. This is the worst of the
three negative scenarios, the bank says.

Russia’s economy is
suffering from stubbornly high inflation, which currently sits at 6.5%,
and has been blamed for eating significantly into living standards in
the country ahead of upcoming parliamentary elections.

In July,
Central Bank of Russia Governor Elvira Nabiullina revealed that the
institution would be hiking its rate to match its key interest rate to
the 6.5% annual inflation rate in a bid to encourage saving and
discourage borrowing. The bank wishes to get this figure down to the
publicly announced target of 4%.



Also on rt.com
IMF’s $650 billion in pandemic relief will mostly go to rich countries

Could Inflation Sink Biden Plan? – The Lone Cactus

https://thelonecactus317896151.wordpress.com/2021/05/16/could-inflation-sink-biden-plan/

Joe Biden is rooting for the economy to come roaring back after COVID. In fact, he’s banking on it. His plans to spend upwards of $4 trillion on infrastructure, COVID relief, Immigration reform, and other topics has got economists’ heads spinning. Not even Bobo Obama could top the spending spree Biden has planned.

But it all could go away at the snap of the fingers.

Joe Biden is facing one of his biggest fears. He knows that if inflation takes off, there is no way he can battle rising, runaway prices, with more spending. That just can’t be done, and the Republicans in Congress would be quick to tackle him and throw him for a loss if he tries it…

China’s Delta Outbreak Worsens As Goldman, Bank Of America Cut Growth Forecasts

https://www.nationandstate.com/2021/08/09/chinas-delta-outbreak-worsens-as-goldman-bank-of-america-cut-growth-forecasts/
China’s Delta Outbreak Worsens As Goldman, Bank Of America Cut Growth Forecasts China’s latest COVID outbreak, the fourth wave to hit the country, has officially become the country’s worst outbreak since the virus first emerged, as the delta variant continues to spread despite Beijing’s heavy-handed response, which has involved testing of millions of people, travel…

Living with high inflation and zero interest rate.

Living with high inflation and zero interest rate

by tonytran2015 (Melbourne, Australia).

Click here for a full, up to date ORIGINAL ARTICLE and to help fighting the stealing of readers’ traffic.

(Blog No. 3xx).

#inflation, #zero interest,

Citizens of Western countries are used to real money like gold, silver or stable fiat moneys. They became so much confused when their fiat moneys became no more stable while their inflation evolved into hyperinflation. They were further fooled by their entrusted leaders that their fiat moneys would some day regain their stability.

Citizens from developing countries have been more familiar with high inflation from their former homelands and are thus more adaptable in facing again with such type of situations. Their experience should be quite appropriate to the current situation.

This blog shows how to live with high inflation as well as zero-interest rate based on the experience of people who had lived under communist regimes.

1. Do NOT mistake fiat money for real money.



This is the most important rule in living with high or hyper inflation.

1a. Fiat money should be thought of as EXPIRABLE certificates to receive goods and services at government depots or stores.

1b. The holders of fiat moneys should arrange with their workmates to send one representative to the stores with a combined shopping lists to buy goods for the whole group right after receiving their salaries. Late buyers may lose his chance of buying goods for the period and may need to buy on the black market at much higher price.

1c. Fuels should be stocked up for use until next pay period.

1d. There will be black markets. Do not complain on their high prices. Black market operators also have their living expenses and have to pay for their operations.  Black markets are not inherently criminal, they are only the mechanism to deal with scarcity arising in main markets. Black markets complement main markets to  supply scarce goods.

2. Be prepared for  scarcity of goods and

their higher prices.

2a. Since the universal medium for exchange such as gold coins no longer exist, double coincidence exchanged are required (A happens to need to change some food into a hammer, B happens need to change a hammer into food, A meets B). The exchange of goods is thus slower and is less often. Wholesaling is almost disbanded and each person is his own buyer and retailer.

2b. Goods are so scarce that there would be no opportunity for mass production and transaction. Therefore costs per item have to increase.

3. Be ready to participate in black markets. Engage in bartering.


As black markets complement the now infrequent, sporadic main markets, citizens should not have any conscientious objections to black markets.

People who are fortunate to have goods in high demand should try their best to exchange them for the most amount of goods for regular consumption or for some high value productive goods.

Bartering is a good way to swap goods without using the annoying depreciating fiat money.

4. Have a clear distinction between productive, consumption and luxury goods.


In hard time, it is essential to distinguish between many types of goods. The main types are:

4a. Long Lasting Productive goods, such as home repair tools, wood working tools, a fishing net, a cooking device, which bring in good stream of incomes when you lend or hire them out. Income can be either in goods or in depreciating fiat money.

4b. Productive goods or stocks which require regular material and labour input and maintenance like hen cages, egg laying hens, milk cows, electric generators, trucks,…

4b. Expense saving goods such as a cooking tool, a sewing kit or a sewing machine which reduce your living expenses (by providing low cost meals, by supplying,  mending your clothes).

4c. Long lasting consumption goods such as rice grains, sugar, salt, alcohol, vinegar, firewood, charcoal, fuel, dress fabrics. They can be stored for few years, swapped for other goods, until finally consumed.



4d. Highly exchangeable goods such as eggs, fruits, seeds, dried foods, preserved foods, medication (both pharmaceutical and traditional), which can be used as a form of real money and can be quickly changed into fiat money when it is time to pay taxes or passport fees, emigration fees, bribes (This is the concept of liquidity.).

4e. Very high value, compact  goods such as gold that can be secretly kept but can also be quickly turned into any other types of goods in an emergency (This is the concept of reserved liquidity).




4f. Highly productive but immobile goods such as houses, shops which bring in high incomes but cannot be readily moved.

4g. Luxury goods such as perfume, designer clothing which are good at impressing acquaintance but rarely can be swapped back to other goods at reasonable rate. Luxury goods are really only for the very top people in such a situation.

As all main and black markets are at slow pace, it is really costly to reverse any unsuitable acquisition. People have to be very careful in their acquisition of goods. The slowness of trade feeds on itself.

5. Be wise in acquiring, owning goods.


People should acquire only productive goods and avoid luxury goods.

Eastern Europeans and people living in Europe during the depression of 1938 do have valuable experience to pass on. We need to learn more from them.

Only the most productive goods should be kept, non-productive goods should be swapped/sold for more productive goods or for fiat money to pay taxes and charges.

Immobile goods such as houses, shops should be swapped for other types of goods if there is a risk of wars or forced migration.

6. Give no loan, demand immediate payment after any work.


Any of your borrowers may go bankrupt any time. You should not take the risk of leaving your earnings with them.

Any big work must be finely divided into many small contracts to be finalized upon seperate completion. In this way, any loss will be smaller than the income of one day.


7. Living with zero interest rate.

Zero interest is the message from the government that savings will not give owners any benefit when kept in banks, public companies. The message also imply that everyone should try his best to obtain low interest loans from government whenever they are available.

Savings left in banks are paid an interest rate linked to the official zero interest rate.

Their real earning is equal to
“Nominal interest rate” Minus “Tax on interest earning” Minus “Actual inflation rate”.

So the real earning is usually a negative number meaning the savings are quickly losing their values.

Public companies are for the welfare of their management class rather than the benefit of shareholders. Returns from owning shares in public companies will only be slightly better than returns from bank savings.

Superannuation and pension funds have their incomes derived mostly from bank interests and dividends from shares in exchange traded public companies. They will  earn little or even have loss.



The implication is: Do NOT leave your money in banks. Do NOT leave your money/entitlement in superannuation or pension funds.


The government may to try to save its reputation by injecting printed money (under fancy names such Quantitative Easing) into over-reaching banks, Stock Markets to keep superannuation/pension funds temporarily solvent but such a situation is unsustainable and the economy may collapse suddenly bringing with it over-reaching banks, companies and their investing superannuation funds.



Try your best to obtain any available government loans, grants to buy productive goods to set up your life. The repayments will vanish very quickly due to the combined effect of zero interest rate and high inflation.

8. Do not fall for any pyramid scheme.


During hard times, pyramid (Ponzi) schemes often pop up (https://survivaltricks.wordpress.com/2021/07/30/as-incomes-fall-russians-are-once-again-falling-for-pyramid-schemes-ukraine-today-org/).

Do not trust promoters, set up your own small, controllable family business/enterprise instead.

References:

1]. Your fiat money (Part 2), posted January 12, 2017.

[2]. Your fiat money, posted January 9, 2017.

[3]. Why does the Federal Reserve aim for 2 percent inflation over time?, Board of Governors of the Federal Reserve System,https://www.federalreserve.gov/faqs/economy_14400.htm, updated January 26, 2015, accessed 03 Mar 2017.
[4]. Neha Sharma and Shalu Yadav, The Indian village that has returned to bartering, BBC News Services,http://www.bbc.com/news/world-asia-india-38180075, 5 December 2016.

[5]. Patrick Bodenham, Will Spain’s coal belt survive through online barter?, BBC News Services,http://www.bbc.com/news/world-europe-38731808, 2 February 2017.

[6]. James Melik, Haggling and bartering gain appeal, BBC News Services,http://news.bbc.co.uk/2/hi/business/7883050.stm, 12 February 2009.

[7]. Mark Lowen, Greece bartering system popular in Volos, BBC News Services,http://www.bbc.com/news/world-europe-17680904, 12 April 2012.

[8]. Dallas police fire pension board ends run, bank stops 154m withdrawals. http://www.dallasnews.com/news/dallas-city-hall/2016/12/08/dallas-police-fire-pension-board-ends-run-bank-stops-154m-withdrawals
[9]. Joseph Goebbels quotes, azquotes.com, http://www.azquotes.com/author/5626-Joseph_Goebbels.
[10]. https://www.moneymetals.com/news/2017/05/04/higher-inflation-consumer-prices-001061, (added on 10 May 2017).
[11]. http://www.zerohedge.com/news/2017-05-13/arizona-passes-bill-end-income-taxation-gold-and-silver

[12]. http://www.gold-eagle.com/article/deepening-crisis-hyper-inflationary-venezuela-and-zimbabwe
[13]. https://us-issues.com/2017/11/21/social-security-inflation-lag-calendar-partial-indexing/

[14]. http://www.silver-phoenix500.com/article/fed%E2%80%99s-%E2%80%9Cfrankenstein%E2%80%9D-policies-are-about-turn-their-master

[15]. https://mises.org/wire/dollar-dilemma-where-here

[16]. https://straightlinelogic.com/2018/08/04/how-inflation-destroys-civilization-by-nick-giambruno/

[17]. https://www.silver-phoenix500.com/article/anatomy-hyperinflation

[18]. https://us-issues.com/2018/08/19/anatomy-of-hyperinflation/

[19]. https://akahinews.com/2018/07/29/venezuelas-bolivar-currency-worthless-as-inflation-hits-1-million-percent/

[20]. https://dailyarchives.org/index.php/history/1046-ben-bernanke-says-hitler-was-the-guy-who-got-economics-right-in-the-1930s

[21]. https://yapaholic.com/2018/08/19/us-national-debt-heres-what-you-need-to-know/

[22]. https://www.caseyresearch.com/how-inflation-destroys-civilization/

[23]. How Venezuela’s crisis developed and drove out millions of people, https://www.bbc.com/news/world-latin-america-36319877



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Let’s Compare The U.S. Economy Before The Pandemic To The U.S. Economy Today — The Economic Collapse | Truth2Freedom’s Blog

https://truth4freedom.wordpress.com/2021/07/27/lets-compare-the-u-s-economy-before-the-pandemic-to-the-u-s-economy-today-the-economic-collapse/

… Our leaders created, borrowed and spent trillions upon trillions of dollars in a desperate attempt to get our economy back on track, and it turns out that all of that money didn’t really have the enormous impact that they had hoped. On the other hand, inflation is now beginning to spiral out of control, and many are comparing this time in our history to the Jimmy Carter era of the 1970s.

In this article, I would like to compare the state of the economy today to the state of the economy just before the pandemic started sweeping across the country.

As you will see, it appears that a tremendous amount of long-term damage has been done…