Global Recovery is Hobbled — A Bad US Jobs Report — Urasian Progress — Iran Joins the Shanghai Cooperation Organization as a Full Member

NOT GOING ANYWHERE

GLOBAL RECOVERY IS HOBBLED — A BAD US JOBS REPORT

Looking at the global economic outlook, the IMF Head Kristalina Georgieva said last week, in a speech for Bocconi University in Italy — “We face a global recovery that remains ‘hobbled’ by the pandemic and its impact. We are unable to walk forward properly – it is like walking with stones in our shoes“.

The US economy is clearly moribund with just 194,000 new jobs added in September when the “expert” forecasts were for an increase of over 500,000. One of BOOM’s major themes over the last 5 years has been the lack of growth in the largest and traditionally most dynamic national economy on Earth. Over the last 4 years, US Gross Domestic Product has increased only marginally on an annual basis. The US is keeping its economy alive with central bank funding of huge government spending programs to “stimulate” the economy. But under the covers, it is asleep.

To give you some idea how bad Friday’s jobs report was, let’s look at the monthly US job creation numbers that were routine 20 years ago. From 1998 through to the year 2000, 300,000 to 400,000 new jobs each month were common results. Since then, the population of the United States has increased from 269 million to 330 million. That is an increase of over 60 million while the total employed has increased by just 20 million. That spells economic danger.

Over the last 16 months, new commercial and industrial bank loans to the US Private Sector have declined from around US$ 3 Trillion to around $ 2.4 Trillion. The fact is that an economy cannot grow if bank loan growth stalls. It is as simple as that. Economic growth in the US has stalled.

The Euro Area economy is also not growing. In fact, its Gross Domestic Product has not increased in 11 years, staying stubbornly around US $ 13 Trillion, expressed in US Dollars.

And the economy in China is now slowing as well. Its GDP is larger than it was in 2018 but the increase is certainly not dramatic. The One Child Policy established in 1979 is estimated to have cost China 400 million births. If those people had been born, China’s economy would now be experiencing a demand driven boom of garguantan size. Instead, that demand is missing. And that potential labor force is also missing.

COMMODITY PRICES

The prices of some commodities have recently become disconnected from economic realities.

Oil and natural gas prices are surging for no apparent reason since late August. These changes cannot be due to excess demand. And neither can they be due to inadequate supply. Supply chain disruption is often used as an explanation but this is not supported by any strong factual analysis. It seems to many that prices are simply being manipulated higher to create a sense of crisis. If energy prices continue to rise at current rates, then they will cause the global economy to slow even more than it has already. That is as certain as night follows day.

Thus, BOOM cannot see how energy prices can rise any further. They should soon stall and start falling. Last Wednesday, Thursday and Friday, natural gas prices looked like they had run out of enthusiastic buyers (continuous contract futures prices on the Chicago Mutual Exchange). They had been rising strongly since 23rd August along with oil prices.

When economic reality dawns, energy prices will start to fall. BOOM expects sovereign bond prices to then surge higher as yield curve expectations adjust. So — watch for falling energy prices to trigger rising bond prices. If this happens as expected, a great bond buying opportunity is coming in the not too distant future. Braver souls among us will consider going short energy contracts while going long bond futures. Timing is everything.

EURASIAN PROGRESS — IRAN JOINS THE SCO AS FULL MEMBER

Just a few short weeks ago, in late September, the Shanghai Cooperation Organization (SCO) Summit was held in Dushanbe, Tajikistan. SCO member states account for 40 percent of the world’s population and 28 percent of the world’s Gross Domestic Product (GDP). The big news there was the move to include Iran as a full member of the Organization — joining China, India, Russia, Pakistan, Kazakhstan, Tajikistan, Kyrgyzstan and Uzbekistan.

Vladimir Putin said “I would like to highlight the Memorandum of Understanding that was signed today between the SCO Secretariat and the Eurasian Economic Commission. It is clearly designed to further Russia’s idea of establishing a Greater Eurasia Partnership covering the SCO, the EAEU (Eurasian Economic Union), ASEAN (Association of Southeast Asian Nations) and China’s Belt and Road initiative (BRI).

Of course, all of these nations are committed to increased trade settlements in their own currencies. They wish to slowly lessen the use of US Dollars as a settlement currency. What is called the international “rules based order” is clearly in decline. That term is often used in an intimidatory fashion in speeches made by Western politicians. Many see it as code for “the US dollar must reign supreme ….. or else”.

The head of the Iran-Russia Joint Chamber of Commerce mentioned an agreement to establish a Joint Banking Council among the members of the SCO as another important step, saying: “The purpose of establishing this joint banking council is to facilitate providing the necessary funding required for the implementation of the members’ joint projects.” That is code for “we are going to avoid using the US Dollar”.

Glenn Diesen has been a Professor at the Higher School of Economics in Moscow, and an Adjunct Research Fellow at Western Sydney University. He is currently a Professor at University of South Eastern Norway. His research includes the geoeconomics of European and Eurasian integration. Diesen’s latest books include: EU and NATO relations with Russia: After the Collapse of the Soviet Union (2015); Russia’s Geoeconomic Strategy for a Greater Eurasia (2017); and The Decay of Western Civilisation and Resurgence of Russia: Between Gemeinschaft and Gesellschaft (2018).

Diesen’s latest book is titled — Europe as the Western Peninsula of Greater Eurasia: Geoeconomic Regions in a Multipolar World. In it, he says China “is pursuing a three-pillared geoeconomic initiative by developing technological leadership via its China 2025 plan, new transportation corridors via its trillion-dollar Belt and Road Initiative, and establishing new financial instruments such as banks, payment systems and the internationalization of the yuan. Russia is similarly pursuing technological sovereignty, both in the digital sphere and beyond, as well as new transportation corridors such as the Northern Sea Route through the Arctic, and, primarily, new financial instruments.

In summary, the Eurasian nations are becoming a significant group both economically and politically. They are intent on rendering Afghanistan to order as it is the next piece in the puzzle. The Islamic Republic of Afghanistan is one of the “Observer States” of the SCO along with the Republic of Belarus and Mongolia.

The SCO also has six “Dialogue Partners”, namely the Republic of Azerbaijan, the Republic of Armenia, the Kingdom of Cambodia, the Federal Democratic Republic of Nepal, the Republic of Turkey, and the Democratic Socialist Republic of Sri Lanka.

The entire conglomeration of nations represents the largest land mass on Earth with 50% of the world’s population. Therein lies a future with massive economic potential. To ignore it or to attempt to irritate it is pure folly. The advanced Western nations must learn to work with it.

In economics, things work until they don’t. Until next week …………  Make your own conclusions, do your own research.  BOOM does not offer investment advice.

CLICK HERE FOR PODCASTS:   OUR BRAVE NEW ECONOMIC WORLD
THE BOOM BLOG:
https://boomfinanceandeconomics.wordpress.com/

DAILY Twitter:     @BOOMFinance
https://twitter.com/BOOMFinance

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HOW MOST MONEY IS CREATED

BANKS CREATE FRESH NEW MONEY OUT OF THIN AIR (but they always need a Borrower to do so)

THERE IS NO SUCH THING AS A DEPOSIT
BANKS PURCHASE SECURITIES, THEY DON’T MAKE LOANS
BANKS DON’T TAKE DEPOSITS, THEY BORROW YOUR MONEY

Watch this short 15 minutes video and learn as Professor Richard Werner brilliantly explains how the banking system and financial sector really work. 

https://www.youtube.com/watch?v=EC0G7pY4wRE
How is Most New Money Created ?

LOANS CREATE DEPOSITS — that is how almost all new money is created in the economy (by commercial banks making loans).

From the Bank of England Quarterly Bulletin Q1 2014    —
“Whenever a bank makes a loan, it simultaneously creates a matching deposit in the borrower’s bank account, thereby creating new money.

“Most money in the modern economy is in the form of bank deposits, which are created by commercial banks themselves”.

Youtube Video —  https://www.bankofengland.co.uk/quarterly-bulletin/2014/q1/money-in-the-modern-economy-an-introduction

and

https://www.bankofengland.co.uk/quarterly-bulletin/2014/q1/money-creation-in-the-modern-economy

Paper:  Money in the Modern Economy  PDF —  CLICK HERE

Quarterly Bulletins Index

http://www.bankofengland.co.uk/publications/Pages/quarterlybulletin/2014/qb14q1.aspx

Most economists are unaware of this and even ignore the banking & finance sectors in their econometric models.

On 25th April 2017, the central bank of Germany, the Bundesbank, released a statement on this matter —

“In terms of volume, the majority of the money supply is made up of book money, which is created through transactions between banks and domestic customers. Sight deposits are an example of book money: sight deposits are created when a bank settles transactions with a customer, ie it grants a credit, say, or purchases an asset and credits the corresponding amount to the customer’s bank account in return. This means that banks can create book money just by making an accounting entry: according to the Bundesbank’s economists, “this refutes a popular misconception that banks act simply as intermediaries at the time of lending – i.e. that banks can only grant credit using funds placed with them previously as deposits by other customers”. By the same token, excess central bank reserves are not a necessary precondition for a bank to grant credit (and thus create money).”

Reference: https://www.bundesbank.de/Redaktion/EN/Topics/2017/2017_04_25_how_money_is_created.html
The Reserve Bank of Australia (Australia’s central bank) has also contributed to the issue in a speech by Christopher Kent, the Assistant Governor on September 19th 2018.
“…… the vast bulk of broad money consists of bank deposits”
“Money can be created …….. when financial intermediaries make loans
“In the first instance, the process of money creation requires a willing borrower.” 
“It’s also worth emphasizing that the process of money creation is not the result of the actions of any single bank – rather, the banking system as a whole acts to create money.”
================================================

Disclaimer:   All content is presented for educational and/or entertainment purposes only. Under no circumstances should it be mistaken for professional investment advice, nor is it at all intended to be taken as such. The commentary and other contents simply reflect the opinion of the authors alone on the current and future status of the markets and various economies. It is subject to error and change without notice.The presence of a link to a website does not indicate approval or endorsement of that web site or any services, products, or opinions that may be offered by them.

Neither the information nor any opinion expressed constitutes a solicitation to buy or sell any securities nor investments. Do NOT ever purchase any security or investment without doing your own and sufficient research.  Neither BOOM Finance and Economics.com nor any of its principals or contributors are under any obligation to update or keep current the information contained herein. The principals and related parties may at times have positions in the securities or investments referred to and may make purchases or sales of these securities and investments while this site is live. The analysis contained is based on both technical and fundamental research.

Although the information contained is derived from sources which are believed to be reliable, they cannot be guaranteed.

Disclosure: We accept no advertising or compensation, and have no material connection to any products, brands, topics or companies mentioned anywhere on the site.

Fair Use Notice: This site contains copyrighted material the use of which has not always been specifically authorized by the copyright owner. We are making such material available in our efforts to advance understanding of issues of economic and social significance. We believe this constitutes a ‘fair use’ of any such copyrighted material as provided for in section 107 of the US Copyright Law. In accordance with Title 17 U.S.C. Section 107, the material on this site is distributed without profit. If you wish to use copyrighted material from this site for purposes of your own that go beyond ‘fair use’, you must obtain permission from the copyright owner.

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MOLS Denmark

Time to Live With Covid — A Discussion on Wealth Disparity — The BOOM Solution

WEALTH DISPARITY

TIME TO LIVE WITH COVID

This short video sums up the recent decisions to live with Covid 19 in Norway and Singapore. Their politicians have decided that the virus is obviously not any great danger to the vast majority of the population. That is true. So they are returning to a normal life — no masks, no lockdowns, no coerced vaccinations and no condemnation of the unvaccinated. RATIONALITY — at last.

Reference: https://www.youtube.com/watch?v=_ItkYhFiGBI

PICKETTY AND HUDSON DISCUSS WEALTH DISPARITY

A discussion between Thomas Picketty and Michael Hudson was published on The Saker website on Friday. It is worthy of consideration because the debate is about our financial system and what is happening in regard to wealth accumulation. BOOM has often discussed this in editorials. The fact is that our financial system, inherited from 15th century Venice, has not changed much since then and clearly operates to place more and more wealth into the hands of the wealthy. The end result is the situation that we have reached in the United States where 1 % of the population is estimated to own 36 % of the private wealth. And that number is also (alarmingly) estimated to grow to 70 % by 2030.

Michael Hudson is a famous American economist, Professor of Economics at the University of Missouri–Kansas City and a researcher at the Levy Economics Institute at Bard College, former Wall Street analyst, political consultant, commentator and journalist. Thomas Picketty is a French economist who is Professor of Economics at the School for Advanced Studies in the Social Sciences, Associate Chair at the Paris School of Economics and Centennial Professor of Economics in the International Inequalities Institute at the London School of Economics. He is the author of the best-selling book Capital in the Twenty-First Century (2013), which emphasised the themes of his work on wealth concentration and distribution over the past 250 years.

Picketty and Hudson strive to discuss the matter of wealth distribution in their debate but both tend to follow well worn paths to arrive at their two “solutions” — (1) Global Control of a Capitalist money system/Globalism/Global Governance and/or (2) Communism — more central control — in particular, the Soviet model where all of the money supply comes from a central source and where no private banking system exists. They don’t discuss who (exactly) will be in “control”. They don’t discuss the difficulties in finding the Clever Committee members required to operate such totalitarian systems of money control. Or the political and economic upheavals that would be required to establish such committees.

By the way, please note that BOOM does not admire the “solutions” that either offer in this debate but does suggest you read the debate nonetheless at the link provided. So what do they discuss?

Michael Hudson is at his best when he sums up the problem succinctly.

The reason that inequality is occurring is that the largest public utility of all, money creation and banking, is left in private hands. Privatized banking in the West is very different from what government banking is in say, China.

Government banking would create credit for public uses, for what the economy needs to grow. In the United States and throughout the West, banks create credit to slow the economy from growing, they make loans not to create new means of production and new factories. They make loans against property already in place – mainly to buy real estate already in place. Some 80% of bank loans in America and Europe are for real estate.

However, BOOM does not agree with his absolutist, Sovietski solution “My solution is to restore banking and credit to public hands to prevent the lending that simply finances asset-price inflation“.

This is a well worn path that Michael explains — “You have to tax the source of the money that pays interest to the banks. That source is mainly economic rent. It’s primarily land rent. If you would tax on the increase in land values, if you’d have a land tax, which is what the whole 19th century was about – Adam Smith, John Stuart Mill and even Marx. You would not have this increased rent being paid to the financial sector to be monopolized by the 1%.”

He does not mention that land taxes already make up a large part of taxation revenues of many States in many nations. And neither does he mention that if you suddenly taxed land much more, then people would stop borrowing to buy land/real estate and a major contraction would occur in the money supply. The result would be a major economic collapse which would not benefit anyone, except the envious.

Then he gives another solution to which BOOM also disagrees —

The only solution is to wipe out the overall debts that are stopping economic growth“.

Picketty explains why Michael is wrong “It’ll take a major political fight to challenge the political rules of the game and the political institutions to change this.

And he describes what the financial sector in China is like — “Regarding the Chinese model, you mentioned the fact that the banking system is working a bit more to the service of the real economy and infrastructure and investments, than the banking system in the West. By and large, the Chinese model looks more and more like a perfect digital dictatorship, and nobody really wants to [chuckles] copy this, apart from other government elite, who would like to keep their population quiet and restrict movement as efficiently as the Beijing regime is doing.”

In regard to the failure of Evergrande in China, Michael is right when he says what the Chinese central controllers will (almost certainly) say –“Well, sorry, bondholders, you made loans to a company that was way over-leveraged. Already, the American bond rating companies have reduced their bond rating to junk. You knew what you were buying. Well, you took the risk, you got a high rate of interest, now you’re paying the price.” That’s how markets work.”

Then Michael goes on to suggest closing down offshore banking centers — in BOOM’s opinion, this is currently not a practical or realistic option because the United States benefits the most from this system of international money creation overwhelmingly denominated in US Dollars or in Euros (which is arguably a US Dollar Proxy). This option may exist in the halls of academia where Michael lives but not in the real world in which we all live where hundreds of US military bases exist to protect the dominance of the US currency in global transactions. And where the trade in weapons and energy, mainly settled in US Dollars, also perpetuates that currency’s dominance.

Then Picketty suggests wealth confiscation and “redistribution”.

This is fraught with political and social problems. It’s not clear where the Clever Committee will be found to do this. Easy to say — not so easy to do from a political viewpoint. It could mean jumping from the pot into a very nasty fire.

Then Michael suggests the taxation of inherited wealth and says that Picketty also suggests this. But he, quite rightly, points out the unpopularity of such a policy — going way back to the early 19th century of Saint Simon to illustrate this.

Sadly, Picketty then introduces the globalist agenda of Totalitarian climate control — “We have to make some of the energy sources just illegal. We have to keep some of the oil in the ground. We have to stop looking for new oil and gas.”  I don’t know if he has ever looked at the origins of our energy system in its entirety and its almost total dependence upon conventional energy — for example a solar panel cannot make a solar panel and an electric car is still made from steel, aluminium, rubber, silicon, plastics and glass. Mining, blast furnaces and agriculture with all their attendant supply chains are still essential. Fertiliser is energy dense. Heating is energy dense. Transport is energy dense.

Picketty then launches into a Sovietski world vision “Whether it’s rent, or energy, or financial assets or housing, we need to have a permanent circulation of wealth and power. Taxation of wealth will be a permanent, progressive tax on net wealth, which, in effect, will wipe out all the biggest wealth right away – say up to 90% tax per year for millionaires”. He fails to mention why anyone would do any work in such a system or take any financial risk which was the ultimate downfall of the Soviet Union — a lack of productivity which became rapidly terminal after 70 years of steady progression towards Zero.

And nowhere do they mention Intellectual Property and its global legal protection as the greatest source of wealth creation and accumulation in the 21st century. Google, for example, has not enriched itself through debt and the ownership of physical assets.

A comment at the end from a reader summarises the situation succinctly — “Without motivation and some amount of greed, no one will do productive work. See: old Soviet Union. Everyone punched in on time, and out on time because the bosses were so strict with time. What they did with it, did not matter. Why? because there was no incentive to do more, or for doing more.”

The Soviet economy was well summed at the end up in the phrase — “we pretended to work and they pretended to pay us”.

Reference: https://thesaker.is/debate-michael-hudson-and-thomas-piketty/

THE BOOM SOLUTION

BOOM has considered all of these matters in many editorials as long term readers know. The best solution is to repair (and restore) the balance between Credit Money (money created as a bank loan and principally collateralized against pre-existing physical assets) and Sovereign Money (money created, interest free by the State and distributed directly into the real economy of goods and services provision).

In our modern world, that will require electronic cash created by the Treasury. This is where BOOM’s Quantitative Boosting (QB) solution comes to the rescue — a form of electronic money free of interest costs, in national currency and injected straight into the real economy (not via the asset markets) to move towards a 50:50 balanced money supply. At present, in the advanced economies Credit Money is 98% of the money supply and Cash is just 2%.

That ratio is at the very crux of the matter and until it is fixed, our financial system will generate more and more wealth for the wealthy. The end result will be more social inequality, social upheaval, political upheaval and distress. Ultimately, we will be back at the Gates of the Bastille and the guillotines will be erected for the upper crust.

QB Explained

and BOOM’s Perfect Economy

In economics, things work until they don’t. Until next week …………  Make your own conclusions, do your own research.  BOOM does not offer investment advice.

CLICK HERE FOR PODCASTS:   OUR BRAVE NEW ECONOMIC WORLD
THE BOOM BLOG:
https://boomfinanceandeconomics.wordpress.com/

DAILY Twitter:     @BOOMFinance
https://twitter.com/BOOMFinance

==================================================

HOW MOST MONEY IS CREATED

BANKS CREATE FRESH NEW MONEY OUT OF THIN AIR (but they always need a Borrower to do so)

THERE IS NO SUCH THING AS A DEPOSIT
BANKS PURCHASE SECURITIES, THEY DON’T MAKE LOANS
BANKS DON’T TAKE DEPOSITS, THEY BORROW YOUR MONEY

Watch this short 15 minutes video and learn as Professor Richard Werner brilliantly explains how the banking system and financial sector really work. 

https://www.youtube.com/watch?v=EC0G7pY4wRE
How is Most New Money Created ?

LOANS CREATE DEPOSITS — that is how almost all new money is created in the economy (by commercial banks making loans).

From the Bank of England Quarterly Bulletin Q1 2014    —
“Whenever a bank makes a loan, it simultaneously creates a matching deposit in the borrower’s bank account, thereby creating new money.

“Most money in the modern economy is in the form of bank deposits, which are created by commercial banks themselves”.

Youtube Video —  https://www.bankofengland.co.uk/quarterly-bulletin/2014/q1/money-in-the-modern-economy-an-introduction

and

https://www.bankofengland.co.uk/quarterly-bulletin/2014/q1/money-creation-in-the-modern-economy

Paper:  Money in the Modern Economy  PDF —  CLICK HERE

Quarterly Bulletins Index

http://www.bankofengland.co.uk/publications/Pages/quarterlybulletin/2014/qb14q1.aspx

Most economists are unaware of this and even ignore the banking & finance sectors in their econometric models.

On 25th April 2017, the central bank of Germany, the Bundesbank, released a statement on this matter —

“In terms of volume, the majority of the money supply is made up of book money, which is created through transactions between banks and domestic customers. Sight deposits are an example of book money: sight deposits are created when a bank settles transactions with a customer, ie it grants a credit, say, or purchases an asset and credits the corresponding amount to the customer’s bank account in return. This means that banks can create book money just by making an accounting entry: according to the Bundesbank’s economists, “this refutes a popular misconception that banks act simply as intermediaries at the time of lending – i.e. that banks can only grant credit using funds placed with them previously as deposits by other customers”. By the same token, excess central bank reserves are not a necessary precondition for a bank to grant credit (and thus create money).”

Reference: https://www.bundesbank.de/Redaktion/EN/Topics/2017/2017_04_25_how_money_is_created.html
The Reserve Bank of Australia (Australia’s central bank) has also contributed to the issue in a speech by Christopher Kent, the Assistant Governor on September 19th 2018.
“…… the vast bulk of broad money consists of bank deposits”
“Money can be created …….. when financial intermediaries make loans
“In the first instance, the process of money creation requires a willing borrower.” 
“It’s also worth emphasizing that the process of money creation is not the result of the actions of any single bank – rather, the banking system as a whole acts to create money.”
================================================

Disclaimer:   All content is presented for educational and/or entertainment purposes only. Under no circumstances should it be mistaken for professional investment advice, nor is it at all intended to be taken as such. The commentary and other contents simply reflect the opinion of the authors alone on the current and future status of the markets and various economies. It is subject to error and change without notice.The presence of a link to a website does not indicate approval or endorsement of that web site or any services, products, or opinions that may be offered by them.

Neither the information nor any opinion expressed constitutes a solicitation to buy or sell any securities nor investments. Do NOT ever purchase any security or investment without doing your own and sufficient research.  Neither BOOM Finance and Economics.com nor any of its principals or contributors are under any obligation to update or keep current the information contained herein. The principals and related parties may at times have positions in the securities or investments referred to and may make purchases or sales of these securities and investments while this site is live. The analysis contained is based on both technical and fundamental research.

Although the information contained is derived from sources which are believed to be reliable, they cannot be guaranteed.

Disclosure: We accept no advertising or compensation, and have no material connection to any products, brands, topics or companies mentioned anywhere on the site.

Fair Use Notice: This site contains copyrighted material the use of which has not always been specifically authorized by the copyright owner. We are making such material available in our efforts to advance understanding of issues of economic and social significance. We believe this constitutes a ‘fair use’ of any such copyrighted material as provided for in section 107 of the US Copyright Law. In accordance with Title 17 U.S.C. Section 107, the material on this site is distributed without profit. If you wish to use copyrighted material from this site for purposes of your own that go beyond ‘fair use’, you must obtain permission from the copyright owner.

==============================================================

MOLS Denmark

China Kills Crypto “Currencies” — Origins of the Virus — Strictly Verboten — BOOM Prediction

THE ELUSIVE PANGOLIN

CHINA KILLS CRYPTO CURRENCIES STONE DEAD

BOOM has often referred to Bitcoin and other so-called “Cryptocurrencies” as US Dollar Proxies, a novel methodology to help expand the supply of US Dollars outside the control of the United States. Such US Dollars are called Eurodollars (wherever they are) and are mostly created by tax haven banks when they create loans denominated in US Dollars. The continual production of Eurodollars is essential as they are used in global trade and capital settlements and when such offshore loans are paid off, Eurodollar volumes decline. Thus, the need for continual replenishment.

It is now clear that China has finally run of all patience with the Crypto “currency” strategy and decided to kill the world of Crypto both inside its nation and (presumably) in all of the nations allied with it in opposition to the global dominance of the US Dollar. This is very big news and a major blow not just to the world of Crypto but also, in the very long run (over the rest of this century), to the US Dollar as the so-called Global Reserve Currency.

On Friday, a Legal Notice dated 15th September, was issued by the Central Bank of China, the Central Internet Credit Office of the Supreme People’s Court, the Ministry of Industry and Information Technology, the Ministry of Public Security, the Supreme People’s Procuratorate General Administration of Market Supervision, the Banking Regulatory Commission and the Foreign Exchange Bureau.

The Notice was “on the further prevention and disposal of the risk of speculation in virtual currency transactions. It stated that “the speculation of virtual currency transactions has risen, disrupting the economic and financial order, breeding illegal and criminal activities such as gambling, illegal fund-raising, fraud, money laundering and seriously endangering the safety of people’s property.”

Then it referred to the “chinese civil bank law of the people’s republic of china, the commercial bank law of the people’s republic of china, the securities law of the people’s republic of china, the cyber security law of the people’s republic of china, the regulations of the people’s republic of china” and stated that “virtual currency does not have the same legal status as legal tender“, is “not legal, should not and can not be used as currency in the market circulation” and “virtual currency-related business activities are illegal financial activities“.

It went on to describe “the illegal issuance of token coupons, unauthorized public issuance of securities, illegal trading of futures business, illegal fund-raising and other illegal financial activities involving virtual currency-related business activities such as legal tender and virtual currency exchange business, virtual currency exchange business, trading virtual currency as a central counterparty, providing information intermediary and pricing services for virtual currency transactions, token issuance financing and virtual currency derivatives trading are strictly prohibited and firmly prohibited“.

Further — “it is also illegal for an overseas virtual currency exchange to provide services to residents in china through the internet. Financial institutions and non-bank payment institutions shall not provide services for virtual currency-related business activities. Financial institutions and non-bank payment institutions shall not provide account opening, fund transfer and settlement services for virtual currency-related business activities“.

It warned of a “crack down on illegal financial activities related to virtual currencies” and a “crack down on criminal activities involving virtual currency“.

Link: http://www.pbc.gov.cn/goutongjiaoliu/113456/113469/4348521/index.html

BOOM PREDICTION

Two months ago, on 25th July, BOOM’s Editorial referred to the recent near death experience of Bitcoin as the Bitcoin price had fallen below US $ 30,000. BOOM stated — “BOOM expects the $ 30,000 support level to be challenged again in the near future.”

It looks to BOOM like that challenge will occur very soon after such a decisive Legal Notice from China, effectively banning Crypto in the second largest national economy on Earth.

On 12th May the Total Market Capitalization of the Crypto Universe reached over US $ 2.5 Trillion. Four months later, it is now below US$ 1.855 Trillion and falling fast. Any Chinese holders will be bailing out desperately, seeking refuge, paradoxically, in US Dollars.

The US Dollar price of Bitcoin is now falling towards US $ 40,000 after its recent peak above $ 52,000 in early July. It looks like the game is over now for long term Chinese “Hodlers” and for any Bitcoin miners inside China.

The US$ 30,000 price for Bitcoin will probably be broken this week. Long term BOOM readers will not be surprised. Watch the fireworks with interest.

ORIGINS OF THE VIRUS

The origins of the SARS Cov2 virus that causes the disease we now know as Covid 19 have been deliberately obfuscated by the mainstream media, by politicians and by the WHO. They have desperately tried to promote the “Bat Soup in the Wuhan Wet Market” theory and the World Health Organization even sent in a team of “investigators” in January this year to find (what else?) that it was most likely of natural origin and was not man made. A Sub Goup Leader was the now infamous Peter Daszak.

Almost nobody believed the subsequent 193 page report released by the WHO in collaboration with the Chinese.

The well known scientific journal — The Lancet — has just released, on September 17th, an article titled — An appeal for an objective, open, and transparent scientific debate about the origin of SARS-CoV-2.

This report states — “there is no direct support for the natural origin of SARS-CoV-2, and a laboratory-related accident is plausible” and “There is so far no scientifically validated evidence that directly supports a natural origin“.

Although considerable evidence supports the natural origins of other outbreaks (eg, Nipah, MERS, and the 2002–04 SARS outbreak) direct evidence for a natural origin for SARS-CoV-2 is missing. After 19 months of investigations, the proximal progenitor of SARS-CoV-2 is still lacking. Neither the host pathway from bats to humans, nor the geographical route from Yunnan (where the viruses most closely related to SARS-CoV-2 have been sampled) to Wuhan (where the pandemic emerged) have been identified. More than 80 000 samples collected from Chinese wildlife sites and animal farms all proved negative.”

STRICTLY VERBOTEN

So — we are still none the wiser as to where this Virus came from. Nobody wants to admit that it was released accidently from a laboratory somewhere, anywhere. And the possibility of deliberate, malevolent release is Strictly Verboten — not to be discussed. The latter possibility would be immediately condemned as a “conspiracy theory” — whatever that means — if anyone was brave enough to suggest it. Conspiracy facts are, of course, always discredited by the “fact checkers” who now appear in abundance on all Google searches about any controversial subject. And nobody in the mainstream wants to consider that the Virus was in existence before the Wuhan incident.

The Lancet Report states — “science embraces alternative hypotheses, contradictory arguments, verification, refutability, and controversy. Departing from this principle risks establishing dogmas, abandoning the essence of science and, even worse, paving the way for conspiracy theories“. But it does not mention the possibility of deliberate release.

BOOM suggests you look under the carpet. However, the Lancet article makes for interesting reading. Here is the Link.

https://www.thelancet.com/journals/lancet/article/PIIS0140-6736(21)02019-5/fulltext

In economics, things work until they don’t. Until next week …………  Make your own conclusions, do your own research.  BOOM does not offer investment advice.

CLICK HERE FOR PODCASTS:   OUR BRAVE NEW ECONOMIC WORLD
THE BOOM BLOG:
https://boomfinanceandeconomics.wordpress.com/

DAILY Twitter:     @BOOMFinance
https://twitter.com/BOOMFinance

==================================================

HOW MOST MONEY IS CREATED

BANKS CREATE FRESH NEW MONEY OUT OF THIN AIR (but they always need a Borrower to do so)

THERE IS NO SUCH THING AS A DEPOSIT
BANKS PURCHASE SECURITIES, THEY DON’T MAKE LOANS
BANKS DON’T TAKE DEPOSITS, THEY BORROW YOUR MONEY

Watch this short 15 minutes video and learn as Professor Richard Werner brilliantly explains how the banking system and financial sector really work. 

https://www.youtube.com/watch?v=EC0G7pY4wRE
How is Most New Money Created ?

LOANS CREATE DEPOSITS — that is how almost all new money is created in the economy (by commercial banks making loans).

From the Bank of England Quarterly Bulletin Q1 2014    —
“Whenever a bank makes a loan, it simultaneously creates a matching deposit in the borrower’s bank account, thereby creating new money.

“Most money in the modern economy is in the form of bank deposits, which are created by commercial banks themselves”.

Youtube Video —  https://www.bankofengland.co.uk/quarterly-bulletin/2014/q1/money-in-the-modern-economy-an-introduction

and

https://www.bankofengland.co.uk/quarterly-bulletin/2014/q1/money-creation-in-the-modern-economy

Paper:  Money in the Modern Economy  PDF —  CLICK HERE

Quarterly Bulletins Index

http://www.bankofengland.co.uk/publications/Pages/quarterlybulletin/2014/qb14q1.aspx

Most economists are unaware of this and even ignore the banking & finance sectors in their econometric models.

On 25th April 2017, the central bank of Germany, the Bundesbank, released a statement on this matter —

“In terms of volume, the majority of the money supply is made up of book money, which is created through transactions between banks and domestic customers. Sight deposits are an example of book money: sight deposits are created when a bank settles transactions with a customer, ie it grants a credit, say, or purchases an asset and credits the corresponding amount to the customer’s bank account in return. This means that banks can create book money just by making an accounting entry: according to the Bundesbank’s economists, “this refutes a popular misconception that banks act simply as intermediaries at the time of lending – i.e. that banks can only grant credit using funds placed with them previously as deposits by other customers”. By the same token, excess central bank reserves are not a necessary precondition for a bank to grant credit (and thus create money).”

Reference: https://www.bundesbank.de/Redaktion/EN/Topics/2017/2017_04_25_how_money_is_created.html
The Reserve Bank of Australia (Australia’s central bank) has also contributed to the issue in a speech by Christopher Kent, the Assistant Governor on September 19th 2018.
“…… the vast bulk of broad money consists of bank deposits”
“Money can be created …….. when financial intermediaries make loans
“In the first instance, the process of money creation requires a willing borrower.” 
“It’s also worth emphasizing that the process of money creation is not the result of the actions of any single bank – rather, the banking system as a whole acts to create money.”
================================================

Disclaimer:   All content is presented for educational and/or entertainment purposes only. Under no circumstances should it be mistaken for professional investment advice, nor is it at all intended to be taken as such. The commentary and other contents simply reflect the opinion of the authors alone on the current and future status of the markets and various economies. It is subject to error and change without notice.The presence of a link to a website does not indicate approval or endorsement of that web site or any services, products, or opinions that may be offered by them.

Neither the information nor any opinion expressed constitutes a solicitation to buy or sell any securities nor investments. Do NOT ever purchase any security or investment without doing your own and sufficient research.  Neither BOOM Finance and Economics.com nor any of its principals or contributors are under any obligation to update or keep current the information contained herein. The principals and related parties may at times have positions in the securities or investments referred to and may make purchases or sales of these securities and investments while this site is live. The analysis contained is based on both technical and fundamental research.

Although the information contained is derived from sources which are believed to be reliable, they cannot be guaranteed.

Disclosure: We accept no advertising or compensation, and have no material connection to any products, brands, topics or companies mentioned anywhere on the site.

Fair Use Notice: This site contains copyrighted material the use of which has not always been specifically authorized by the copyright owner. We are making such material available in our efforts to advance understanding of issues of economic and social significance. We believe this constitutes a ‘fair use’ of any such copyrighted material as provided for in section 107 of the US Copyright Law. In accordance with Title 17 U.S.C. Section 107, the material on this site is distributed without profit. If you wish to use copyrighted material from this site for purposes of your own that go beyond ‘fair use’, you must obtain permission from the copyright owner.

==============================================================

MOLS Denmark

Iron Ore Price CRASHES — China Slows — Precious Metals Not So Precious — Corny Prices — Zuby Wisdom

BOOM ON LAKE ZURICH

IRON ORE COLLAPSES

CHINA SLOWS

This year, BOOM has written often about his expectation for falling commodity prices and the expectation of more falls. Recently, BOOM wrote “As China’s economy slows, it will tend to lower global commodity prices — especially in regard to the key commodity inputs into the Chinese economy.”

Since July 16th, the Iron Ore price has fallen from US $ 222 per tonne to just $ 104 per tonne. BOOM’s stance has been vindicated. That is a price CRASH and BOOM suspects that it will continue as the price of Iron Ore falls towards $ 50 per tonne.

The big iron ore producers will be affected significantly by the China slowdown. BHP, RIO and VALE stock prices in New York have already fallen by 26 %, 20 % and 30 % respectively since mid July. There is a term used in financial markets for this situation — “catch the falling knife”. It can be a dangerous game.

Palladium has also fallen — from its peak of $ 280 in early May to $ 180. As with Iron Ore, BOOM expects further falls will happen as the price heads back towards $ 100.

PRECIOUS METALS UNCERTAINTY

So let’s look at other weak commodity prices.

Precious metals prices have been weak over the last 12 months with buyers remaining unenthusiastic. Prices are again under pressure as far as BOOM can see. The US Dollar price of Gold (Continuous Contract) has fallen from $ 2,100 to the current price at $ 1,750. The US Dollar price of Silver (Continuous Contract) has fallen from $ 30 to just above $ 22. That is a 26 % fall annualized. Yikes. To BOOM’s jaundiced eye, these prices continue to look weak and unattractive.

Platinum has joined the party late. It peaked in February at $ 1,350 and is now at $ 930 — a fall of 30 % in 6 months. If that continues, investors will be looking at 60 % losses during 2021 if they bought at the peak mid February price levels. Yikes again.

The current price dynamics of these precious metals do not look strong to BOOM.

Meanwhile, the US Dollar Index has been trading in a strong sideways range over the last 12 months. US Dollar movement is clearly not the cause of these commodity and precious metals price falls.

CORNY PRICES

The price of Corn doubled from August last year at US$ 350 to $ 700 in May this year. A staggering increase indeed and one of the reasons why some people were predicting a CPI inflation outbreak. But since the peak at $ 700 in May, the price has fallen to just $ 500 and it looks friendless at current levels. BOOM is not confident of buyer interest here.

The Agriculture ETF traded in New york with the code DBA has been trying to continue its stellar rise that began in July last year but has been struggling to rise above $ 19.50 fpr the last 5 months. The strong run looks like it is over. BOOM expects the price to fall from here.

OIL PRICES SHOULD JOIN THE PARTY

With key Chinese input commodity prices falling, precious metals prices falling and food input prices falling or reaching overhead resistance, BOOM is now looking for the price of Oil to weaken and begin a descent. West Texas Light Crude is currently trading around $ 72 per barrel (Continuous Contract). BOOM expects a price range of $ 40 – $ 50 by the end of the year. However, the future is unpredictable because anything unexpected can happen. Unexpected events can play havoc with expectations.

As long term readers will know, BOOM has held the view for some time that CPI inflation threats have been exaggerated. BOOM feels that any CPI inflation in the advanced economies this year (and probably all of next year) is going to be transitory. The Fed in Washington DC agrees.

TWENTY OBSERVATIONS ALL OVER THE NET

The UK-based rapper known as Zuby recently listed 20 observations on Twitter, and his list went viral. His real name is Nzube Olisaebuka Udezue. And his specialty seems to be commonsense.

BOOM especially likes this one — “Access to limitless information has not made the average person any wiser.”

QUOTE:

20 Things I’ve Learned (Or Had Confirmed) About Humanity During The “Pandemic”

1. Most people would rather be in the majority, than be right.

2. At least 20% of the population has strong authoritarian tendencies, which will emerge under the right conditions.

3. Fear of death is only rivaled by the fear of social disapproval. The latter could be stronger.

4. Propaganda is just as effective in the modern day as it was 100 years ago. Access to limitless information has not made the average person any wiser.

5. Anything and everything can and will be politicized by the media, government, and those who trust them.

6. Many politicians and large corporations will gladly sacrifice human lives if it is conducive to their political and financial aspirations.

7. Most people believe the government acts in the best interests of the people. Even many who are vocal critics of the government.

8. Once they have made up their mind, most people would rather commit to being wrong, than admit they were wrong.

9. Humans can be trained and conditioned quickly and relatively easily to significantly alter their behaviors — for better or worse.

10. When sufficiently frightened, most people will not only accept authoritarianism, but demand it.

11. People who are dismissed as “conspiracy theorists” are often well researched and simply ahead of the mainstream narrative.

12. Most people value safety and security more than freedom and liberty, even if said “safety” is merely an illusion.

13. Hedonic adaptation occurs in both directions, and once inertia sets in, it is difficult to get people back to “normal.”

14. A significant % of people thoroughly enjoy being subjugated.

15. “The Science” has evolved into a secular pseudo-religion for millions of people in the West. This religion has little to do with science itself.

16. Most people care more about looking like they are doing the right thing, rather than actually doing the right thing.

17. Politics, the media, science, and the healthcare industries are all corrupt, to varying degrees. Scientists and doctors can be bought as easily as politicians.

18. If you make people comfortable enough, they will not revolt. You can keep millions docile as you strip their rights, by giving them money, food, and entertainment.

19. Modern people are overly complacent and lack vigilance when it comes to defending their own freedoms from government overreach.

20. It’s easier to fool a person than to convince them that they have been fooled.” UNQUOTE

In economics, things work until they don’t. Until next week …………  Make your own conclusions, do your own research.  BOOM does not offer investment advice.

CLICK HERE FOR PODCASTS:   OUR BRAVE NEW ECONOMIC WORLD
THE BOOM BLOG:
https://boomfinanceandeconomics.wordpress.com/

DAILY Twitter:     @BOOMFinance
https://twitter.com/BOOMFinance

==================================================

HOW MOST MONEY IS CREATED

BANKS CREATE FRESH NEW MONEY OUT OF THIN AIR (but they always need a Borrower to do so)

THERE IS NO SUCH THING AS A DEPOSIT
BANKS PURCHASE SECURITIES, THEY DON’T MAKE LOANS
BANKS DON’T TAKE DEPOSITS, THEY BORROW YOUR MONEY

Watch this short 15 minutes video and learn as Professor Richard Werner brilliantly explains how the banking system and financial sector really work. 

https://www.youtube.com/watch?v=EC0G7pY4wRE
How is Most New Money Created ?

LOANS CREATE DEPOSITS — that is how almost all new money is created in the economy (by commercial banks making loans).

From the Bank of England Quarterly Bulletin Q1 2014    —
“Whenever a bank makes a loan, it simultaneously creates a matching deposit in the borrower’s bank account, thereby creating new money.

“Most money in the modern economy is in the form of bank deposits, which are created by commercial banks themselves”.

Youtube Video —  https://www.bankofengland.co.uk/quarterly-bulletin/2014/q1/money-in-the-modern-economy-an-introduction

and

https://www.bankofengland.co.uk/quarterly-bulletin/2014/q1/money-creation-in-the-modern-economy

Paper:  Money in the Modern Economy  PDF —  CLICK HERE

Quarterly Bulletins Index

http://www.bankofengland.co.uk/publications/Pages/quarterlybulletin/2014/qb14q1.aspx

Most economists are unaware of this and even ignore the banking & finance sectors in their econometric models.

On 25th April 2017, the central bank of Germany, the Bundesbank, released a statement on this matter —

“In terms of volume, the majority of the money supply is made up of book money, which is created through transactions between banks and domestic customers. Sight deposits are an example of book money: sight deposits are created when a bank settles transactions with a customer, ie it grants a credit, say, or purchases an asset and credits the corresponding amount to the customer’s bank account in return. This means that banks can create book money just by making an accounting entry: according to the Bundesbank’s economists, “this refutes a popular misconception that banks act simply as intermediaries at the time of lending – i.e. that banks can only grant credit using funds placed with them previously as deposits by other customers”. By the same token, excess central bank reserves are not a necessary precondition for a bank to grant credit (and thus create money).”

Reference: https://www.bundesbank.de/Redaktion/EN/Topics/2017/2017_04_25_how_money_is_created.html
The Reserve Bank of Australia (Australia’s central bank) has also contributed to the issue in a speech by Christopher Kent, the Assistant Governor on September 19th 2018.
“…… the vast bulk of broad money consists of bank deposits”
“Money can be created …….. when financial intermediaries make loans
“In the first instance, the process of money creation requires a willing borrower.” 
“It’s also worth emphasizing that the process of money creation is not the result of the actions of any single bank – rather, the banking system as a whole acts to create money.”
================================================

Disclaimer:   All content is presented for educational and/or entertainment purposes only. Under no circumstances should it be mistaken for professional investment advice, nor is it at all intended to be taken as such. The commentary and other contents simply reflect the opinion of the authors alone on the current and future status of the markets and various economies. It is subject to error and change without notice.The presence of a link to a website does not indicate approval or endorsement of that web site or any services, products, or opinions that may be offered by them.

Neither the information nor any opinion expressed constitutes a solicitation to buy or sell any securities nor investments. Do NOT ever purchase any security or investment without doing your own and sufficient research.  Neither BOOM Finance and Economics.com nor any of its principals or contributors are under any obligation to update or keep current the information contained herein. The principals and related parties may at times have positions in the securities or investments referred to and may make purchases or sales of these securities and investments while this site is live. The analysis contained is based on both technical and fundamental research.

Although the information contained is derived from sources which are believed to be reliable, they cannot be guaranteed.

Disclosure: We accept no advertising or compensation, and have no material connection to any products, brands, topics or companies mentioned anywhere on the site.

Fair Use Notice: This site contains copyrighted material the use of which has not always been specifically authorized by the copyright owner. We are making such material available in our efforts to advance understanding of issues of economic and social significance. We believe this constitutes a ‘fair use’ of any such copyrighted material as provided for in section 107 of the US Copyright Law. In accordance with Title 17 U.S.C. Section 107, the material on this site is distributed without profit. If you wish to use copyrighted material from this site for purposes of your own that go beyond ‘fair use’, you must obtain permission from the copyright owner.

==============================================================

MOLS Denmark

THE LAST POST by Dr Geert Van Den Bossche — Unprecedented Global Financial Crisis — IMF Boosts Money supply — All About FLOW

GARDENS BY THE BAY

GEERT VAN DEN BOSSCHE — THE LAST POST

He is a super expert in vaccine development. Some QUOTES: —

“… mass vaccination campaigns may have a beneficial short-time effect ….. but will eventually drive the propagation of more infectious variants.”

“A vaccine that only prevents hospitalizations and severe Covid-19 disease is not good enough to be used to combat a pandemic.”

“There should be no doubt that non-transmission-blocking vaccines (i.e., so-called ‘leaky’ or ‘imperfect’ vaccines) CAN NEVER EVER CONTROL A PANDEMIC, even though they may temporarily protect against disease.”

“The mass vaccination hype will undoubtedly enter history as the most reckless experiment in the history of medicine.”

” … mass vaccination campaigns during a pandemic of highly infectious variants fail to control viral transmission.”

“This IRRATIONAL EXPERIMENT will unambiguously highlight the clear-cut limitations of conventional vaccine approaches.”

” … the mass vaccination program is nothing else but a big experiment. For how much longer is the public going to believe the treacherous narrative?”

“Only a mind that has lost its grasp on reality can fail to see how pathetic all this has become …..”

Link: https://www.geertvandenbossche.org/post/the-last-post

His Detailed CV in Vaccinology:

THE IMF BOOSTS SUPPLY of SPECIAL DRAWING RIGHTS

The International Monetary Fund (IMF) is an international financial institution, headquartered in Washington, D.C., consisting of 190 countries working to “foster global monetary cooperation, secure financial stability, facilitate international trade, promote high employment and sustainable economic growth, and reduce poverty around the world”. It was formed in 1944 well before the end of World War Two at the Bretton Woods Conference attended by the alliance of Nations (the “Allies”) opposed to the Axis nations (lead by Nazi Germany, Italy and Japan).

It plays a central role in the management of balance of payments difficulties (trade and capital settlements) and international financial crises. Member countries contribute funds to a pool through a quota system from which countries experiencing balance of payments problems can borrow money. As of 2016, the fund had a total of SDR 477 billion (about US$667 billion).

IMF funds come from two major sources: quotas and loans. Quotas, which are pooled funds of member nations, generate most of the IMF’s funds. The size of a member nation’s quota (contribution) depends on its economic and financial importance. Nations with greater economic significance have larger quotas — they provide funds to help nations with smaller economies — in essence and ominously, becoming their bankers. The fund quotas are increased periodically as a means of boosting the IMF’s resources in the form of Special Drawing Rights (SDRs).

On 24th August, Ceyla Pazarbasioglu, Director of the Strategy, Policy and Review Department of the IMF made a Podcast to explain the recent release (or “allocation”) of US$ 650 Billion worth of SDR’s from the IMF to its client nations. She explained that there is a current “unprecedented crisis” in the global financial system requiring the allocation of these new SDR’s.

Special Drawing Rights (SDR), established in 1969, are international reserve assets, used as the accounting unit for IMF transactions with its member countries. They can be transferred for use by individual nations into one of five component national currencies.

There are two things to understand here —

1. what is a Reserve Asset?

2. what (exactly) is an SDR?

What is a “reserve asset”?  Answer – in banking terminology, it is a loan from one bank to another. It can be a loan of currencies, commodities (such as gold), or any other financial capital. The loans are made by the IMF to national client central banks. The subsequent funds can then be used to help finance trade settlements, “smooth” foreign exchange fluctuations or can be used to purchase assets. In other words, the IMF will make such loans if there is some international liquidity problem.

The recent issue of US $ 650 Billion worth of SDR’s was done in order to stimulate more global liquidity to assist in global central bank transactions — presumably because of increased demand or because of a (relative) reduced supply of SDR’s. That may be a good thing in response to an increased demand for trade settlements or a bad thing if reflective of central bank hoarding of SDR’s or an inadequacy of SDR’s in some nations. Take your pick.

It is important to remember, however, that $ 650 Billion is a relatively small amount in terms of global trade settlements which amount to about $ 20 Trillion per year (just for goods). To help with the perspective, $ 20 Trillion is 20,000 Billion.

However, $ 650 Billion is a large amount when compared to the previous balance of SDR’s held by the IMF as it represents almost a doubling of that number. Take your pick. In the Global Financial crisis of 2008/2009, an allocation of just US $ 250 Billion was made to help stabilize the global financial system on that occasion.

Ceyla Pazarbasioglu described this recent “allocation” of SDR’s as “unprecedented” and “the largest allocation ever” in response to the “unprecedented ” global crisis caused by the Covid 19 pandemic. She used the word unprecedented twice in her Podcast. To BOOM that seems significant and possibly unprecedented. She also said that “$ 21 Billion will go to low income countries”. Thus, you can assume that the rest will not.

What is an SDR? — Special drawing rights (SDRs) are foreign exchange reserve assets defined and maintained by the IMF. SDRs are units of account for the IMF, and not a currency per se. They represent a claim to currency held by IMF member countries (and for which they may be exchanged).

Thus, an SDR is a unit of account for the IMF and the world’s central banks. It is made up of five currencies — The value of an SDR is calculated from a weighted basket of major currencies, including the U.S. Dollar 41.73%, the Euro 30.93%, Chinese Yuan 10.92%, Japanese Yen 8.33% and British Pound 8.09%. You can clearly see the dominance of the US Dollar and the Euro (arguably a proxy for the US Dollar).

Interestingly, these relative amounts of currencies that make up an SDR do not reflect the foreign currency holdings of global central banks — US Dollar 58 %, Euro 18.8%, Yen 5.3%, Pound 4.14%, Chinese Yuan 1.89 %.

Clearly, there needs to be much more Chinese Yuan held by central banks to allow more trade settlement in Yuan. That will happen eventually as China progressively settles more trade purchases with Yuan and its currency is correspondingly accepted by other nations. Russia and China are now moving down that pathway more and more as the years go by but other nations will soon be asked to do so as well.

China must move more Yuan offshore slowly but surely to better balance central banks’ foreign exchange reserves. Or find a way to create such funds externally via bank loans created externally and denominated in Yuan. This is the next big monetary trend that must take place progressively over the next 50 – 100 years as the US Dollar loses its dominance and becomes more balanced by Yuan.

THE FINANCIAL CRISIS — ALL ABOUT FLOW

What about the “unprecedented” financial “liquidity” crisis? BOOM has often referred to money as water for a garden. The garden is the real economy of goods and services being transacted daily. If the water flow reduces or stops, then the garden will suffer and may even die.

Paradoxically, the current crisis is not caused by lack of money — there is plenty of money — but it is progressively being trapped and cannot flow. It is trapped in the asset exchange economy where money changes hands infrequently but only from one owner to another when a large pre-existent asset is bought and sold. That money is not in daily circulation. It is not liquid in the real economy. This is all made worse by Asset Price Inflation and the fact that almost all of the money supply in western, “advanced” economies is created as a bank loan collateralized against a pre-existent asset. We need much more money created in a different way. That means more CASH created by the sovereign nations. Yes — despite it being unfashionable, more CASH is the answer to the world’s economic woes.

Currently central banks clearly know this and they are creating more money in Quantitative Easing Programs and injecting it into the real economy but via the asset markets (in purchasing bonds and other financial assets). Stupid. Dumb. The new money needs to find its way into the real economy directly. Physical cash would work but is unwieldy and slow. This is where BOOM’s Quantitative Boosting (QB) solution comes to the rescue — a form of electronic money free of interest costs, in national currency and injected straight into the real economy.

QB Explained

and BOOM’s Perfect Economy

In economics, things work until they don’t. Until next week …………  Make your own conclusions, do your own research.  BOOM does not offer investment advice.

CLICK HERE FOR PODCASTS:   OUR BRAVE NEW ECONOMIC WORLD
THE BOOM BLOG:
https://boomfinanceandeconomics.wordpress.com/

DAILY Twitter:     @BOOMFinance
https://twitter.com/BOOMFinance

==================================================

HOW MOST MONEY IS CREATED

BANKS CREATE FRESH NEW MONEY OUT OF THIN AIR (but they always need a Borrower to do so)

THERE IS NO SUCH THING AS A DEPOSIT
BANKS PURCHASE SECURITIES, THEY DON’T MAKE LOANS
BANKS DON’T TAKE DEPOSITS, THEY BORROW YOUR MONEY

Watch this short 15 minutes video and learn as Professor Richard Werner brilliantly explains how the banking system and financial sector really work. 

https://www.youtube.com/watch?v=EC0G7pY4wRE
How is Most New Money Created ?

LOANS CREATE DEPOSITS — that is how almost all new money is created in the economy (by commercial banks making loans).

From the Bank of England Quarterly Bulletin Q1 2014    —
“Whenever a bank makes a loan, it simultaneously creates a matching deposit in the borrower’s bank account, thereby creating new money.

“Most money in the modern economy is in the form of bank deposits, which are created by commercial banks themselves”.

Youtube Video —  https://www.bankofengland.co.uk/quarterly-bulletin/2014/q1/money-in-the-modern-economy-an-introduction

and

https://www.bankofengland.co.uk/quarterly-bulletin/2014/q1/money-creation-in-the-modern-economy

Paper:  Money in the Modern Economy  PDF —  CLICK HERE

Quarterly Bulletins Index

http://www.bankofengland.co.uk/publications/Pages/quarterlybulletin/2014/qb14q1.aspx

Most economists are unaware of this and even ignore the banking & finance sectors in their econometric models.

On 25th April 2017, the central bank of Germany, the Bundesbank, released a statement on this matter —

“In terms of volume, the majority of the money supply is made up of book money, which is created through transactions between banks and domestic customers. Sight deposits are an example of book money: sight deposits are created when a bank settles transactions with a customer, ie it grants a credit, say, or purchases an asset and credits the corresponding amount to the customer’s bank account in return. This means that banks can create book money just by making an accounting entry: according to the Bundesbank’s economists, “this refutes a popular misconception that banks act simply as intermediaries at the time of lending – i.e. that banks can only grant credit using funds placed with them previously as deposits by other customers”. By the same token, excess central bank reserves are not a necessary precondition for a bank to grant credit (and thus create money).”

Reference: https://www.bundesbank.de/Redaktion/EN/Topics/2017/2017_04_25_how_money_is_created.html
The Reserve Bank of Australia (Australia’s central bank) has also contributed to the issue in a speech by Christopher Kent, the Assistant Governor on September 19th 2018.
“…… the vast bulk of broad money consists of bank deposits”
“Money can be created …….. when financial intermediaries make loans
“In the first instance, the process of money creation requires a willing borrower.” 
“It’s also worth emphasizing that the process of money creation is not the result of the actions of any single bank – rather, the banking system as a whole acts to create money.”
================================================

Disclaimer:   All content is presented for educational and/or entertainment purposes only. Under no circumstances should it be mistaken for professional investment advice, nor is it at all intended to be taken as such. The commentary and other contents simply reflect the opinion of the authors alone on the current and future status of the markets and various economies. It is subject to error and change without notice.The presence of a link to a website does not indicate approval or endorsement of that web site or any services, products, or opinions that may be offered by them.

Neither the information nor any opinion expressed constitutes a solicitation to buy or sell any securities nor investments. Do NOT ever purchase any security or investment without doing your own and sufficient research.  Neither BOOM Finance and Economics.com nor any of its principals or contributors are under any obligation to update or keep current the information contained herein. The principals and related parties may at times have positions in the securities or investments referred to and may make purchases or sales of these securities and investments while this site is live. The analysis contained is based on both technical and fundamental research.

Although the information contained is derived from sources which are believed to be reliable, they cannot be guaranteed.

Disclosure: We accept no advertising or compensation, and have no material connection to any products, brands, topics or companies mentioned anywhere on the site.

Fair Use Notice: This site contains copyrighted material the use of which has not always been specifically authorized by the copyright owner. We are making such material available in our efforts to advance understanding of issues of economic and social significance. We believe this constitutes a ‘fair use’ of any such copyrighted material as provided for in section 107 of the US Copyright Law. In accordance with Title 17 U.S.C. Section 107, the material on this site is distributed without profit. If you wish to use copyrighted material from this site for purposes of your own that go beyond ‘fair use’, you must obtain permission from the copyright owner.

==============================================================

MOLS Denmark

CHINA VERSUS RUSSIA

BOOM BOOM VROOM

FOCUS ON CHINA OVER 10 YEARS

The Chinese economy is a mystery to many observers. Many experts continually predict the fall of the Chinese economy. They say it is fragile, that it will collapse due to a heavy burden of debt, that it is too heavily controlled, that it is not open enough, that it “manipulates” its currency.

In 2015, a China “expert” wrote “having been the locomotive for global growth following the financial crisis in 2008, Chinese growth has now slowed and its economy is looking increasingly fragile.” BOOM has lost count of the number of times such sentences have been written by so-called economic experts on the subject of China. Lack of democracy is often referred to as a cause of imminent demise. Other explanations include lack of property rights (especially in intellectual property) and loss of talent to the US. On and on they go, forever predicting the end of the China economic miracle.

And yet, China continues to grow and to provide improved living conditions for its people. Its currency is exactly where it was 10 years ago in relation to the US Dollar. In that same time frame of 10 years, its annual GDP growth has averaged around 7 % p.a. and its GDP per Capita on a Purchasing Power Parity basis (PPP) has doubled — again showing a growth rate of about 7 % p.a. Its annual CPI inflation rate has averaged around 2 %. Its Core inflation rate has averaged 1.5 %. The Minimum Wage has doubled, as has the Average Wage while its unemployment rate has been steady and averaged around 4.5 %.

Exports have doubled in US Dollar terms. Imports have grown but have not doubled, increasing by about 65 %. Tourism revenues have tripled. The Government’s Budget Deficit has averaged around 2 % of GDP. Military expenditures have grown also by 7 % p.a. but are still relatively modest compared to the US. US military spending is estimated to be currently around US $ 750 Billion annually. China’s is estimated to be around US $ 250 Billion.

Business confidence measures are very stable as is capacity utilization. Car production and car registrations are stable. Cement production is stable. Electricity production has doubled. Steel production has doubled.

Consumer Credit has surged fivefold, reflecting a stong growth in consumer confidence. Disposable personal income has doubled. Household debt to GDP has doubled. Gasoline prices have almost halved.

Government Debt to GDP has doubled, again revealing a 7 % p.a. growth rate but is still low by international standards at around 68 % of GDP. Gold Reserves have doubled. Its 10 year government bond yield has averaged around 3.5 % (currently 2.848 % with a positive yield curve right out to the 30 year yield at 3.42 %).

So — it all looks very stable and well managed. Next time you see an article predicting the “imminent collapse of the Chinese economy”, take a deep breath and wonder about the author, not the Chinese economy.

CHINA BOND MARKET

How does China finance its economy? Interestingly, it does so overwhelmingly via new bank loan creation. The annual bank loan growth rate is around 12 % p.a.

The total bond issuance in China is estimated to be around US $ 15 Trillion. The US market is estimated to be US$ 50 Trillion. BOOM regards the Chinese market as not a large domestic bond market in comparison with the US and especially in regard to its population which is around 5 times larger than the US.

Some people point out that China’s bond market is the second largest national bond market on the planet. However, being the world’s second largest market does not make it “large” relative to the US market or its huge population.

China has cleverly avoided bond issuance as a major financing methodology compared to the US, relying instead on the issuance of new bank loans. And that has been a good policy because they seem to appreciate the subtle fact that bond issuance ensures the flow of finance but without any correspondent increase in the supply of new money.

This has become America’s Achilles Heel in regard to financing its economy. The US must wake up to this point. The US economy is being relatively starved of fresh new money via bank loan creation. The size of the US bond market relative to its GDP is the problem. As a result, economic growth is stagnant.

The US bond market is more than twice the size of its GDP. The Chinese bond market is approximately equal to its GDP. Therein lies the problem for the US. They need more fresh new money via well regulated bank loan creation and, especially, via new cash issuance.

They must stop their obsession with bond issuance.

By the way, Japan’s Bond Market is around US$ 13 Trillion (with a population of less than one tenth that of China). The Emerging Markets nations combined actually have a total bond issuance of more than $ 15 Trillion. That is more than Chinese bond issuance.

THE RUSSIAN ECONOMY OVER 10 YEARS

Let’s take a look at the Russian economy. Over the last 10 years, its currency has depreciated steadily in relation to the US Dollar (halved). In that same time frame of 10 years, its annual GDP growth has averaged around 2 – 3 % p.a. over the last 10 years but its GDP per Capita on a Purchasing Power Parity basis (PPP) has barely increased, which means its people have not seen any large improvement in living conditions. Its annual CPI inflation rate has averaged around 6 – 7 %. Its Core inflation rate has also averaged 6 – 7 %. The Minimum Wage has tripled while the Average Wage has doubled. Its unemployment rate has been steady and averaged around 5.5 %.

Exports have halved in US Dollar terms (bear in mind the currency has depeciated by a similar amount). Imports have been relatively stable in US Dollar terms. The Government’s Budget Deficit has averaged around 1.5 % of GDP. Military expenditures have grown marginally from around US$ 50 Billion p.a. to about US$ 65 Billion but are still modest compared to the US and China. As previously noted, US military spending is estimated to be currently around US $ 750 Billion annually while China’s is estimated to be around US $ 250 Billion.

Business confidence measures are moribund as is capacity utilization. Car production has fallen marginally. Total vehicle sales have fallen by about 20 % in total. Cement production is stable. Steel production has increased by about 20 % in total annual production, revealing poor growth in industrialization and construction.

Consumer Credit has surged fourfold but consumer confidence has fallen significantly. Household debt to GDP has doubled. Gasoline prices have fallen by 40 %.

Government Debt to GDP has doubled, revealing a 7 % p.a. growth rate but it is still very low by international standards at around only 18 % of GDP. Its 10 year government bond yield has averaged around 8.5 % and is currently 7.03 % — reflecting the weakness of the currency over time.

COMPARISON

If you compare the Chinese economy and the Russian economy over the last decade, it is clear that the management of the Chinese economy is far superior to that of the Russians. Russian living conditions are not rising anywhere near as fast as those of the Chinese people. China has the advantage of a large manufacturing sector while Russia has abundant energy and commodities. Both nations should work together more closely to take advantage of their respective economic strengths. But that is easier said than done. Perhaps the Belt and Road strategy being adopted by China as it moves its industrial focus more towards the west geographically will benefit Russia over the next decade. However, Russia must grasp this opportunity or else it may find increased prosperity for its people to be an illusive goal.

In economics, things work until they don’t. Until next week …………  Make your own conclusions, do your own research.  BOOM does not offer investment advice.

CLICK HERE FOR PODCASTS:   OUR BRAVE NEW ECONOMIC WORLD
THE BOOM BLOG:
https://boomfinanceandeconomics.wordpress.com/

DAILY Twitter:     @BOOMFinance
https://twitter.com/BOOMFinance

==================================================

HOW MOST MONEY IS CREATED

BANKS CREATE FRESH NEW MONEY OUT OF THIN AIR (but they always need a Borrower to do so)

THERE IS NO SUCH THING AS A DEPOSIT
BANKS PURCHASE SECURITIES, THEY DON’T MAKE LOANS
BANKS DON’T TAKE DEPOSITS, THEY BORROW YOUR MONEY

Watch this short 15 minutes video and learn as Professor Richard Werner brilliantly explains how the banking system and financial sector really work. 

https://www.youtube.com/watch?v=EC0G7pY4wRE
How is Most New Money Created ?

LOANS CREATE DEPOSITS — that is how almost all new money is created in the economy (by commercial banks making loans).

From the Bank of England Quarterly Bulletin Q1 2014    —
“Whenever a bank makes a loan, it simultaneously creates a matching deposit in the borrower’s bank account, thereby creating new money.

“Most money in the modern economy is in the form of bank deposits, which are created by commercial banks themselves”.

Youtube Video —  https://www.bankofengland.co.uk/quarterly-bulletin/2014/q1/money-in-the-modern-economy-an-introduction

and

https://www.bankofengland.co.uk/quarterly-bulletin/2014/q1/money-creation-in-the-modern-economy

Paper:  Money in the Modern Economy  PDF —  CLICK HERE

Quarterly Bulletins Index

http://www.bankofengland.co.uk/publications/Pages/quarterlybulletin/2014/qb14q1.aspx

Most economists are unaware of this and even ignore the banking & finance sectors in their econometric models.

On 25th April 2017, the central bank of Germany, the Bundesbank, released a statement on this matter —

“In terms of volume, the majority of the money supply is made up of book money, which is created through transactions between banks and domestic customers. Sight deposits are an example of book money: sight deposits are created when a bank settles transactions with a customer, ie it grants a credit, say, or purchases an asset and credits the corresponding amount to the customer’s bank account in return. This means that banks can create book money just by making an accounting entry: according to the Bundesbank’s economists, “this refutes a popular misconception that banks act simply as intermediaries at the time of lending – i.e. that banks can only grant credit using funds placed with them previously as deposits by other customers”. By the same token, excess central bank reserves are not a necessary precondition for a bank to grant credit (and thus create money).”

Reference: https://www.bundesbank.de/Redaktion/EN/Topics/2017/2017_04_25_how_money_is_created.html
The Reserve Bank of Australia (Australia’s central bank) has also contributed to the issue in a speech by Christopher Kent, the Assistant Governor on September 19th 2018.
“…… the vast bulk of broad money consists of bank deposits”
“Money can be created …….. when financial intermediaries make loans
“In the first instance, the process of money creation requires a willing borrower.” 
“It’s also worth emphasizing that the process of money creation is not the result of the actions of any single bank – rather, the banking system as a whole acts to create money.”
================================================

Disclaimer:   All content is presented for educational and/or entertainment purposes only. Under no circumstances should it be mistaken for professional investment advice, nor is it at all intended to be taken as such. The commentary and other contents simply reflect the opinion of the authors alone on the current and future status of the markets and various economies. It is subject to error and change without notice.The presence of a link to a website does not indicate approval or endorsement of that web site or any services, products, or opinions that may be offered by them.

Neither the information nor any opinion expressed constitutes a solicitation to buy or sell any securities nor investments. Do NOT ever purchase any security or investment without doing your own and sufficient research.  Neither BOOM Finance and Economics.com nor any of its principals or contributors are under any obligation to update or keep current the information contained herein. The principals and related parties may at times have positions in the securities or investments referred to and may make purchases or sales of these securities and investments while this site is live. The analysis contained is based on both technical and fundamental research.

Although the information contained is derived from sources which are believed to be reliable, they cannot be guaranteed.

Disclosure: We accept no advertising or compensation, and have no material connection to any products, brands, topics or companies mentioned anywhere on the site.

Fair Use Notice: This site contains copyrighted material the use of which has not always been specifically authorized by the copyright owner. We are making such material available in our efforts to advance understanding of issues of economic and social significance. We believe this constitutes a ‘fair use’ of any such copyrighted material as provided for in section 107 of the US Copyright Law. In accordance with Title 17 U.S.C. Section 107, the material on this site is distributed without profit. If you wish to use copyrighted material from this site for purposes of your own that go beyond ‘fair use’, you must obtain permission from the copyright owner.

==============================================================

MOLS Denmark

China Total Social Financing Declines — The Lumber Crash — TIMBERRR (!) — US Consumer Confidence Crashing — US DEFICIT Over $ 3 Trillion — The Vaccines Have a Problem

BOOM ON THE BAY

CHINA TOTAL SOCIAL FINANCING

Over the years, BOOM has often referred to the higher level of sophistication in macro money management in China compared to western “advanced” economies. Loans from Banks and loans from Shadow Banks in China are in close synchronicity over the years — one rises while the other falls and vice versa. It is like a well choreographed dance. This allows for a dual money supply system. When the central bank wants commercial bank loan growth to fall, it allows riskier shadow loans to rise and vice versa. This is extremely clever way to manage the money supply to the real economy, smoothing out the ups and downs and creating a reliable stability of money stock and money supply. China does not have a large domestic bond market. Thus capital does not get caught up in the round robin of funding governmental, municipal and corporate bond issuance.

These dynamics give China a huge advantage over the “advanced” economies such as the US. What they do is only possible in a centrally controlled economy. BOOM is not a proponent of that but , in the West, the economies are almost totally exposed to the swings and roundabouts of fresh new money supply generated by new bank loans. Thus, in the so-called “advanced” economies, we are always exposed to the need for emergence of new borrowers in the private sector to keep our money stock from falling as old bank loans are paid off. This is why we are so dependent upon interest rate settings from the central banks which set the short term interest rates while leaving the 10 – 30 year rates to the market. There is an endless uncertainty about what the central banks will or won’t do. And this drives fear which is the arch enemy of a stable economy.

In China, stability is the goal and, thus, households and businesses can rely on a steady money stock situation (and growth) from year to year.

BOOM wrote about stability in the money stock last week in regard to the 1950’s and 1960’s when the West had no choice but to rely on the supply and circulation of large quantities of physical cash. Because cash is non-interest bearing and can be issued by the Treasury directly into the real economy, it can have a soothing effect on the swings and roundabouts of money supply. We need to learn that lesson again in the advanced economies.

At present in China, the money supply from the Shadow Bankimg system is in decline since late 2020. In that same time frame, the money supply from the official, commercial Banking system is rising but, notably, it is not rising as fast as the shadow supply is falling. Thus, this will, inevitably, cause a relative slowing in the real economy. And that is exactly what we are seeing. The China Economic Activity Index has fallen from above 55 in October 2020 to 52.4 in July this year.

As China’s economy slows, it will tend to lower global commodity prices — especially in regard to the key commodity inputs into the Chinese economy. The recent falls in Iron Ore prices are indicative of that. The Chinese economy is now the engine of global growth so we will see a knock-on effect globally.

THE LUMBER CRASH — TIMBER (!)

The price of Lumber in the US has fallen dramatically since its peak on May 10th. The Continuous Futures Contract has fallen from around $ 1700 on that date to just $ 500. It is now back inside its trading range over the last 5 years.

Prices for Iron ore, wheat, corn, palladium and copper have all stalled or peaked around May 10th. The price of oil has been more resilient but BOOM expects it to weaken in the near future. The outlier at present is Natural Gas. Its Futures prices continue to rise. However, BOOM expects that to end soon. Some brave souls will try to pick the top and buy Puts to ride the roller coaster down.

Commodities are simply returning to Earth after a bizarre surge towards heaven. China will not pay higher prices and will certainly not pay absurd prices for its key inputs.

US CONSUMER CONFIDENCE CRASHING

Meanwhile, US Consumer Confidence as measured by the University of Michigan has crashed to its lowest point in 10 years. The chart looks terrible. Take note.

US DEFICIT OVER $ 3 TRILLION

Also meanwhile, the US Congressional Budget Office says the Federal Budget Deficit for the 2021 budget year, which ends in September, will exceed $ 3 TRILLION. That is the gap between Taxation Revenue and Government Expenditure. The US economy is effectively being kept alive with this deficit spending which is supposedly a “temporary” measure.

THE VACCINES HAVE A PROBLEM

The wheels are rapidly falling off the “vaccines are our salvation, our ticket to freedom” argument that is being pushed so forcefully by many governments and mainstream media in many nations. There is the smell of desperation now wafting around the world as the truth is slowly but surely emerging. The idea that economic recovery will follow mass vaccination appears to be deeply flawed.

It is becoming clear that the Covid vaccines are “leaky”. They do not stop the vaccinated from acquiring the virus (in particular, the now dominant Delta variant) and they do not stop them transmitting the virus. A leaky vaccine is one that lacks sterilizing immunity. It may prevent severe infection and perhaps death, but it does not stop infection and colonization by the virus. In this situation, the vaccinated become carriers, unaware of it and therefore, they can easily spread it to others. This also makes the virus more likely to become endemic. In other words, the vaccines mean that elimination is a false goal.

The famous French vaccinologist, Professor Christian Perronne recently said “Vaccinated people are at risk of the new variants. In transmission, it’s been proven now in several countries that vaccinated people should be put in quarantine and isolated from society. Unvaccinated people are not dangerous; vaccinated people are dangerous to others.

Also, the vaccinated are now sometimes falling seriously ill with the Delta Variant and ending up in hospital. Luckily, deaths are not usually as common as with the Alpha variant. But that is not guaranteed. Israel is the test case where 80 % of the adult population over 20 years of age are vaccinated. Right now, 80 – 95% of new cases there are fully vaccinated (depending upon age bracket). Daily new case numbers have surged to 10,000 per day which is the same level as Israel experienced in its first two waves in September 2020 and January 2021. Worryingly, deaths per day numbers attributed to Covid are also presently rising towards the levels seen in those first two waves.

In Iceland, the most heavily vaccinated nation, the new cases of Delta variant are emerging at rates higher than the two first waves. So the extensive vaccination programs there have clearly failed to stop the virus. More and more, it is looking like the vaccinated are (possibly) driving the emergence of the Delta variant.

Thankfully, total death numbers from all causes in Israel are still in the normal range — so there is still no Pandemic of Excess Death occurring.

The word “pandemic” has been massively abused over the last 18 months by health authorities, governments and the mainstream media. It has been used to instil fear and panic with the aim being control — total control.

A PrePrint study published on August 10th in the prestigious medical journal, The Lancet, has shown that 69 healthcare workers in a large infectious diseases hospital tested positive for SARS-CoV-2. All recovered uneventfully. They were all infected with the Delta variant, and tests were …. “suggestive of ongoing transmission between the workers. Viral loads of breakthrough Delta variant infection cases were 251 times higher than those of cases infected with old strains detected between March-April 2020“.

The study involved a small group of workers so this is a very early report and should not be relied upon. A larger study involving up to a thousand health workers would be much more meaningful statistically.

The conclusion of the study was: “Breakthrough Delta variant infections are associated with high viral loads, prolonged PCR positivity, and low levels of vaccine-induced neutralizing antibodies, explaining the transmission between the vaccinated people.”

Please note that these preprints are early stage research papers that have not been peer-reviewed. The findings should not be used for clinical or public health decision making and should not be presented to a lay audience without highlighting that they are preliminary and have not been peer-reviewed.

The Preprint is available here: https://papers.ssrn.com/sol3/papers.cfm?abstract_id=3897733

In economics, things work until they don’t. Until next week …………  Make your own conclusions, do your own research.  BOOM does not offer investment advice.

CLICK HERE FOR PODCASTS:   OUR BRAVE NEW ECONOMIC WORLD
THE BOOM BLOG:
https://boomfinanceandeconomics.wordpress.com/

DAILY Twitter:     @BOOMFinance
https://twitter.com/BOOMFinance

==================================================

HOW MOST MONEY IS CREATED

BANKS CREATE FRESH NEW MONEY OUT OF THIN AIR (but they always need a Borrower to do so)

THERE IS NO SUCH THING AS A DEPOSIT
BANKS PURCHASE SECURITIES, THEY DON’T MAKE LOANS
BANKS DON’T TAKE DEPOSITS, THEY BORROW YOUR MONEY

Watch this short 15 minutes video and learn as Professor Richard Werner brilliantly explains how the banking system and financial sector really work. 

https://www.youtube.com/watch?v=EC0G7pY4wRE
How is Most New Money Created ?

LOANS CREATE DEPOSITS — that is how almost all new money is created in the economy (by commercial banks making loans).

From the Bank of England Quarterly Bulletin Q1 2014    —
“Whenever a bank makes a loan, it simultaneously creates a matching deposit in the borrower’s bank account, thereby creating new money.

“Most money in the modern economy is in the form of bank deposits, which are created by commercial banks themselves”.

Youtube Video —  https://www.bankofengland.co.uk/quarterly-bulletin/2014/q1/money-in-the-modern-economy-an-introduction

and

https://www.bankofengland.co.uk/quarterly-bulletin/2014/q1/money-creation-in-the-modern-economy

Paper:  Money in the Modern Economy  PDF —  CLICK HERE

Quarterly Bulletins Index

http://www.bankofengland.co.uk/publications/Pages/quarterlybulletin/2014/qb14q1.aspx

Most economists are unaware of this and even ignore the banking & finance sectors in their econometric models.

On 25th April 2017, the central bank of Germany, the Bundesbank, released a statement on this matter —

“In terms of volume, the majority of the money supply is made up of book money, which is created through transactions between banks and domestic customers. Sight deposits are an example of book money: sight deposits are created when a bank settles transactions with a customer, ie it grants a credit, say, or purchases an asset and credits the corresponding amount to the customer’s bank account in return. This means that banks can create book money just by making an accounting entry: according to the Bundesbank’s economists, “this refutes a popular misconception that banks act simply as intermediaries at the time of lending – i.e. that banks can only grant credit using funds placed with them previously as deposits by other customers”. By the same token, excess central bank reserves are not a necessary precondition for a bank to grant credit (and thus create money).”

Reference: https://www.bundesbank.de/Redaktion/EN/Topics/2017/2017_04_25_how_money_is_created.html
The Reserve Bank of Australia (Australia’s central bank) has also contributed to the issue in a speech by Christopher Kent, the Assistant Governor on September 19th 2018.
“…… the vast bulk of broad money consists of bank deposits”
“Money can be created …….. when financial intermediaries make loans
“In the first instance, the process of money creation requires a willing borrower.” 
“It’s also worth emphasizing that the process of money creation is not the result of the actions of any single bank – rather, the banking system as a whole acts to create money.”
================================================

Disclaimer:   All content is presented for educational and/or entertainment purposes only. Under no circumstances should it be mistaken for professional investment advice, nor is it at all intended to be taken as such. The commentary and other contents simply reflect the opinion of the authors alone on the current and future status of the markets and various economies. It is subject to error and change without notice.The presence of a link to a website does not indicate approval or endorsement of that web site or any services, products, or opinions that may be offered by them.

Neither the information nor any opinion expressed constitutes a solicitation to buy or sell any securities nor investments. Do NOT ever purchase any security or investment without doing your own and sufficient research.  Neither BOOM Finance and Economics.com nor any of its principals or contributors are under any obligation to update or keep current the information contained herein. The principals and related parties may at times have positions in the securities or investments referred to and may make purchases or sales of these securities and investments while this site is live. The analysis contained is based on both technical and fundamental research.

Although the information contained is derived from sources which are believed to be reliable, they cannot be guaranteed.

Disclosure: We accept no advertising or compensation, and have no material connection to any products, brands, topics or companies mentioned anywhere on the site.

Fair Use Notice: This site contains copyrighted material the use of which has not always been specifically authorized by the copyright owner. We are making such material available in our efforts to advance understanding of issues of economic and social significance. We believe this constitutes a ‘fair use’ of any such copyrighted material as provided for in section 107 of the US Copyright Law. In accordance with Title 17 U.S.C. Section 107, the material on this site is distributed without profit. If you wish to use copyrighted material from this site for purposes of your own that go beyond ‘fair use’, you must obtain permission from the copyright owner.

==============================================================

MOLS Denmark

Central Bank Digital Currencies — Electronic Cash — BOOM’s Quantitative Boosting Solution — Stunning Covid Article

BOOM FINANCE AND ECONOMICS

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THIS WEEK’S EDITORIAL

CENTRAL BANK DIGITAL CURRENCIES

ELECTRONIC CASH

The major central banks of the advanced economies have been making waves by occasionally talking about CBDC’s — Central Bank Digital Currencies. The subject stirs great suspicion and consternation amongst people who are concerned about central bank power. They are fearful that the central banking system will thus be able to track all transactions and exert social control systems over them. They seem to overlook the fact that the commercial banking system already has that power.

Of course, these discussions are actually misleading from both sides. Why? Because national currencies are already digital and have been for many decades. And central banks do not issue currencies — they borrow or loan funds denominated in their respective national currencies based upon ledger entries with their client commercial banks and their client governments. Or they buy and sell assets with their client commercial banks and their client governments. Sometimes, they are the lender of last resort and sometimes they are the borrower of last resort — but all of their direct actions are ledger based in the arena of banking and government where they are dealing in so-called “Reserve Assets” and “Reserve Liabilities”. The ledger entries are of course denominated in the national currency as a matter of convention. A global digital currency already exists which is used to settle most international transactions. It is called the US Dollar.

An individual or a corporation, in most nations, cannot hold an account with a central bank. Central banks do not trade with the real economy. Most of their actions are aimed at either boosting liquidity (money flow) or restricting it in the banking sector. The aim of such actions is to slow or speed the real economy via either restricting credit demand or boosting it in response to the threat (or otherwise) of CPI inflation. Sometimes, they are busy protecting their client commercial banks when they get into trouble with poor loan books and increased loan defaults. They can arrange for increased liquidity to these banks for a while but if a bank’s loan book is beyond repair, then they can arrange their rescue via a takeover from another larger bank. Total bank failures are now a rare event as the central banks come to the rescue and cover up the situation — preferably before anyone in the general public becomes aware of what is happening.

Central banks also attend to the demand and supply of their national currency in the global foreign exchange markets. Again, they do this by buying and selling assets denominated in national currencies or by buying and selling foreign exchange derivatives.

So — back to CBDC’s — central bank digital currencies. These are essentially efforts by central banks to create electronic forms of non-interest bearing cash. BOOM thinks that is a worthwhile cause but BOOM also thinks that the very nature of central bank activities precludes this from occurring (hopefully).

Sovereign governments issue cash which is non-interest bearing money. But the other glory of cash is that no borrower is required for its issuance. It can be created by the sovereign or the state as and when required. And it can be recalled from the banking system as and when required.

Currently in the most advanced economies, the money stock (money in existence) is in the form of credit money (bank loan created) and cash. Credit money is 98 % of the money stock and Cash is 2 %. This is a ridiculous situation. In the post World War Two era from 1945 to 1965, the cash component was far, far greater. This allowed vast quantities of cash to circulate in the real economy. And that money had no interest cost attached to it. Thus, it was used for the settlement of many, many transactions. During those “golden years” the average citizen and average family was not as enslaved by debt as they are today.

In the US, for example, the CPI inflation rate from 1955 – 1970 averaged about 1 – 2 % annually. It was incredibly stable. In August 1971, the US President Nixon released the Dollar from the Gold price and allowed it to “float”. The US commercial banks were finally allowed to create credit in response to demand for loans not linked to a static price of Gold. And Credit Money as a percentage of the total money stock began to rise and rise. As a result, the volume and circulation of cash began to fall in relative terms. Credit cards also contributed to this. The era of Credit Money had begun in earnest.

Initially, the CPI inflation rate in the US fell. But by early 1972, it started to rise to a peak of 12 % p.a. in 1975. It then fell again but started rising again in 1977. And it rose to a peak of 15 % annualized in 1981. That was the peak of CPI inflation in the US. It fell sharply after that because the central bank raised the overnight interest rate to 20 %. That is called the Federal Funds rate for money loaned to banks overnight.

Since then we have never come close to such high CPI inflation rates and overnight rates. CPI inflation was tamed. Credit Money Madness had been unleashed.

However, the era of “golden prosperity” was long forgotten. The huge contribution of interest free cash to social cohesion and financial stability was also forgotten. The mad rush to bank created credit money had begun and there appeared to be no turning back. Banks led the charge, of course, because they could see great profit opportunities in the expansion of their loan books as they rode the demographic wave of the Baby Boomers into the future.

This all worked (reasonably) well until 2008 when the Global Financial Crisis occurred due to an apparently sudden severe loss of confidence between banks and the failure of some major banks in the US, especially some of the Primary Dealer Banks which were supposedly the strongest commecial banks of all. The sudden dramatic failure of Lehmann Brothers bank was the event that sent shock waves around the world. Bear Sterns bank and stock brokerage also failed. Suddenly, the US central bank looked vulnerable and arguably incompetent. They had failed to see what was coming and had failed to repair it ……. or perhaps they had engineered it? Nobody knows for sure.

Since 2008, the advanced economies have been struggling to grow essentially because of a relative decline in willing borrowers and credit money growth. Central banks have tried to create CPI inflation without much success. Government taxation revenues have been adversely affected and budget deficits have inevitably grown because taxation revenues could not match government expenditure programs. Central banks have come to the rescue with their Quantitative Easing Programs providing huge amounts of funds in return for government issued bonds. The governments have dutifully spent this central bank money and held their economies from collapse.

This has led to some “stability” in the financial system since 2009 and in economic growth trajectories. But this has all been mediated via the asset markets — especially the bond markets. And that “stability” has been won at the cost of Asset Price Inflation. That asset price inflation has led to huge social inequalities and the accumulatuion of wealth into fewer and fewer hands.

It is now time to return to the 1950’s and the 1960’s. We need MUCH MORE CASH to be circulated through our real economies. The central banks seem to understand this (especially in China) and they are taking steps to remedy the situation. BOOM has been strongly suggesting this for some years now. But a return to physical cash in large volumes is impractical. Hence the talk of central bank electronic cash — CBDC’s (central bank digital currencies).

This is fraught with difficulty. As I have pointed out, central banks are actually not in a position to issue large amounts of Cash to the real economy. So the move towards CBDC’s appears to be a pipe dream.

BOOM’s QUANTITATIVE BOOSTING SOLUTION

BOOM’s solution is called Quantitative Boosting QB (as opposed to Quantitative Easing, QE) and it is actually rather simple. It does not require the issuance of any “new” currency. It uses the national currency and the ledgers in existence of the commercial banks, the central banks and the Treasury department of governments.

A Tripartite Pre-Agreement is required between those three parties where they agree to expand all of their balance sheets in the creation of increased Reserve Assets at the Commercial Banks in loans to the Central Bank. The resultant funds are then loaned to the Treasury (that loan becomes a Reserve Asset of the central bank). The funds are then spent by the Treasury into the real economy and they (inevitably) end up as Deposits in the Commercial Banks. Thus, the funds are created by the Commercial Banks, loaned to the central bank and then subsequently loaned to the Treasury. Then they are returned to the Commercial Banks in the form of Deposits. It is effectively a Closed Loop system.

The other essential element of Quantitative Boosting in the Tripartite Pre-Agreement is the agreement to not charge interest on the loans from the commercial banks and the loans from the central bank. Such Pre-Agreement can also include an agreement to forgive the capital payment at loan maturity or to transfer the loan period to Perpetuity.

The only foreseeable problem with QB is that the money created this way cannot be destroyed and must be permanent in nature. Bank loans, by contrast, usually destroy money as they are paid off. And Cash is destroyed as it is recalled and re-issued. The permanence of such interest free money, however, should not be a problem as long as it does not generate out-of-control CPI inflation. The interest free money created under QB will continue to circulate in the real economy, providing much needed stability and utility.

Social cohesion should eventually occur as the society uses the interest free electronic cash over and over again. Its volume in the money stock relative to Credit Money could theoretically rise to 50%.

STUNNING COVID ARTICLE

Last week an interview with Professor Christian Perronne was published. He is arguably France’s most highly rated expert in viral diseases and vaccines. The interview is stunning in its clarity and in its messages. BOOM recommends it highly. The transcript of the interview is available at the link. He states that current government Covid policies are stupid and unethical.

He also says  “Vaccinated people are at risk of the new variants. In transmission, it’s been proven now in several countries that vaccinated people should be put in quarantine and isolated from society.

Unvaccinated people are not dangerous; vaccinated people are dangerous to others. That’s been proven in Israel now, where I’m in contact with many physicians. They’re having big problems in Israel now: severe cases in hospitals are among vaccinated people.”

“….. lockdown was completely useless

PCR tests are much more amplified, and so we have many, many false positive results.”

And finally  “….. we cannot reach herd immunity through vaccination.”

Link: https://www.ukcolumn.org/video/frances-long-time-vaccine-policy-chief-covid-policy-is-completely-stupid-and-unethical

==============================================================

In economics, things work until they don’t. Until next week …………  Make your own conclusions, do your own research.  BOOM does not offer investment advice.

CLICK HERE FOR PODCASTS:   OUR BRAVE NEW ECONOMIC WORLD
THE BOOM BLOG:
https://boomfinanceandeconomics.wordpress.com/

DAILY Twitter:     @BOOMFinance
https://twitter.com/BOOMFinance

==================================================

HOW MOST MONEY IS CREATED

BANKS CREATE FRESH NEW MONEY OUT OF THIN AIR (but they always need a Borrower to do so)

THERE IS NO SUCH THING AS A DEPOSIT
BANKS PURCHASE SECURITIES, THEY DON’T MAKE LOANS
BANKS DON’T TAKE DEPOSITS, THEY BORROW YOUR MONEY

Watch this short 15 minutes video and learn as Professor Richard Werner brilliantly explains how the banking system and financial sector really work. 

https://www.youtube.com/watch?v=EC0G7pY4wRE
How is Most New Money Created ?

LOANS CREATE DEPOSITS — that is how almost all new money is created in the economy (by commercial banks making loans).

From the Bank of England Quarterly Bulletin Q1 2014    —
“Whenever a bank makes a loan, it simultaneously creates a matching deposit in the borrower’s bank account, thereby creating new money.

“Most money in the modern economy is in the form of bank deposits, which are created by commercial banks themselves”.

Youtube Video —  https://www.bankofengland.co.uk/quarterly-bulletin/2014/q1/money-in-the-modern-economy-an-introduction

and

https://www.bankofengland.co.uk/quarterly-bulletin/2014/q1/money-creation-in-the-modern-economy

Paper:  Money in the Modern Economy  PDF —  CLICK HERE

Quarterly Bulletins Index

http://www.bankofengland.co.uk/publications/Pages/quarterlybulletin/2014/qb14q1.aspx

Most economists are unaware of this and even ignore the banking & finance sectors in their econometric models.

On 25th April 2017, the central bank of Germany, the Bundesbank, released a statement on this matter —

“In terms of volume, the majority of the money supply is made up of book money, which is created through transactions between banks and domestic customers. Sight deposits are an example of book money: sight deposits are created when a bank settles transactions with a customer, ie it grants a credit, say, or purchases an asset and credits the corresponding amount to the customer’s bank account in return. This means that banks can create book money just by making an accounting entry: according to the Bundesbank’s economists, “this refutes a popular misconception that banks act simply as intermediaries at the time of lending – i.e. that banks can only grant credit using funds placed with them previously as deposits by other customers”. By the same token, excess central bank reserves are not a necessary precondition for a bank to grant credit (and thus create money).”

Reference: https://www.bundesbank.de/Redaktion/EN/Topics/2017/2017_04_25_how_money_is_created.html
The Reserve Bank of Australia (Australia’s central bank) has also contributed to the issue in a speech by Christopher Kent, the Assistant Governor on September 19th 2018.
“…… the vast bulk of broad money consists of bank deposits”
“Money can be created …….. when financial intermediaries make loans
“In the first instance, the process of money creation requires a willing borrower.” 
“It’s also worth emphasizing that the process of money creation is not the result of the actions of any single bank – rather, the banking system as a whole acts to create money.”
================================================

Disclaimer:   All content is presented for educational and/or entertainment purposes only. Under no circumstances should it be mistaken for professional investment advice, nor is it at all intended to be taken as such. The commentary and other contents simply reflect the opinion of the authors alone on the current and future status of the markets and various economies. It is subject to error and change without notice.The presence of a link to a website does not indicate approval or endorsement of that web site or any services, products, or opinions that may be offered by them.

Neither the information nor any opinion expressed constitutes a solicitation to buy or sell any securities nor investments. Do NOT ever purchase any security or investment without doing your own and sufficient research.  Neither BOOM Finance and Economics.com nor any of its principals or contributors are under any obligation to update or keep current the information contained herein. The principals and related parties may at times have positions in the securities or investments referred to and may make purchases or sales of these securities and investments while this site is live. The analysis contained is based on both technical and fundamental research.

Although the information contained is derived from sources which are believed to be reliable, they cannot be guaranteed.

Disclosure: We accept no advertising or compensation, and have no material connection to any products, brands, topics or companies mentioned anywhere on the site.

Fair Use Notice: This site contains copyrighted material the use of which has not always been specifically authorized by the copyright owner. We are making such material available in our efforts to advance understanding of issues of economic and social significance. We believe this constitutes a ‘fair use’ of any such copyrighted material as provided for in section 107 of the US Copyright Law. In accordance with Title 17 U.S.C. Section 107, the material on this site is distributed without profit. If you wish to use copyrighted material from this site for purposes of your own that go beyond ‘fair use’, you must obtain permission from the copyright owner.

==============================================================

MOLS Denmark

Hyperinflation — Halt Mass Vaccination — Israel Covid Crisis — Crypto Crime Again

BOOM FINANCE AND ECONOMICS

Testimonials:

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BOOM seeks out the very best information from authoritative sources and strives for consistency in its quality and trustworthiness. In evidence of this, BOOM has developed a loyal readership which includes many of the world’s most senior economists, central bankers, fund managers and academics. We strive to always have good relationships with our readers. If you want a real edge in understanding the complex world of finance and economics, subscribe to BOOM as a Follower on LinkedIn or as a Subscriber (Free) to the BOOM Newspaper at http://boomfinanceandeconomics.com/#/

THIS WEEK’S EDITORIAL


HYPERINFLATION IN LEBANON

Yet another Hyperinflation event is underway. This time the target nation is Lebanon. As in all Hyperinflation events, it is not really about rising prices. It is about currency collapse or, perhaps it is more accurately described as currency confidence collapse — CCC.

A Hyperdeflation in one currency always occurs in tandem with the hyperinflation in the national currency. So Hyper-Deflations and Hyper-Inflations go hand in hand.

During Hyperinflation events, the people abandon their local, national currency due to lack of confidence in both the economic future of their nation and their political class. They switch to any readily available alternative currency. So such an alternative currency must already be in circulation as a pre-requisite condition.

And that alternative currency must be generally accepted by the bulk of the people as settlement of daily transactions, especially after confidence collapses. The US Dollar is usually the candidate available to swap into because it is in circulation in many nations and is tolerated (amazingly) by many national governments — presumably due to corruption of the political class at the highest levels. Such events are impossible in nations which control their borders well and who strictly ban the use of alternative currencies.

Some will say — “this is due to excessive money printing”. But that cannot be right. The pre-condition of an alternative currency must always be fulfilled. Let’s look at the world’s champion money printer — Japan – where only the Yen is tolerated.

Their central bank Balance Sheet has increased 7 fold over the last 20 years. Their M1 Money Supply, their M2 Money Supply and M3 have only doubled. Their total of Loans to the Private Sector has only increased by 25 % since 2005 — in 15 years. Their annual growth in bank loans has been moribund.

Thus, you can see that their money supply growth has pretty much come from their central bank over that period and not from commercial bank loan creation or from cash issuance. And, notably, there has been no CPI inflation over the last 20 years with the inflation rate averaging ZERO. There has been no currency collapse either with the Yen averaging around 110 to the US Dollar.

Of course, many Yen have been destroyed in that period with bank loans being paid off. And the population has progressively aged as well while their total GDP has not grown much at all in transaction volumes. All of those circumstances will create dis-inflation (falling CPI inflation rates) or deflation (negative CPI inflation rates).

From this comparison, we can see that money supply, money destruction, demographics and confidence are a complex mix. Sustained high CPI inflation cannot be easily constructed purely by “money printing” and cannot easily morph into a hyperinflation event. A corruptible and/or incompetent political class which tolerates alternative currencies to circulate is perhaps the most essential element.

The dominance of the circulating US Dollar over the national currency is illustrated in this passage from a recent DW article. That dominance is destroying the economy and the nation.

QUOTE: “People who have access to US dollars, either from the outside or from the inside through the black market, are able to live a lifestyle beyond their original means,” Bassel Salloukh, a political scientist at the Lebanese American University in Beirut, told DW.”

“However, few people have access to “fresh cash,” or money that hasn’t been invested before, and in Lebanon’s particular case, it also means the transfer of US dollars from abroad. For example, those who rent apartments. The currency is in such high demand that most property owners demand rent in dollars — and that’s forcing many tenants to move out.” UNQUOTE

Source: https://www.dw.com/en/lebanon-dollars-shield-some-from-hyperinflation-crisis/a-58843383

HALT THE MASS VACCINATION PROGRAM

Geert Van Den Bossche is a Vaccinologist — an expert in the world of vaccines and vaccine Development. He has been Head of the German Vaccine Development Office at the German Centre for Infection Research (DZIF) and also Senior Program Officer, Global Health, Vaccine Discovery at the Bill & Melinda Gates Foundation (BMGF). He was also Director, Research Program Leader and Head of Adjuvants for Novartis Vaccines & Diagnostics. And Head of Adjuvant Technologies and Alternative Deliveries, R&D at GlaxoSmithKline Biologicals.

He states that “Mass infection prevention and mass vaccination with leaky Covid-19 vaccines in the midst of the pandemic can only breed highly infectious variants“.

In his latest article, also published on his website, he says “This first critical step can only be achieved by calling an immediate halt to the mass vaccination program and replacing it by widespread use of antiviral chemoprophylactics while dedicating massive public health resources to scaling early multidrug treaments of Covid-19 disease.”

And “the ongoing universal mass vaccination program will soon promote dominant propagation of highly infectious, neutralization escape mutants (i.e., so-called ‘S Ab-resistant variants’), naturally acquired, or vaccinal neutralizing Abs, will, indeed, no longer offer any protection to immunized individuals whereas high infectious pressure will continue to suppress the innate immune defense system of the nonvaccinated. “

There can be no doubt that resistance to vaccinal Abs will be the endpoint of any mass vaccination program that uses modern vaccines during a pandemic of an acute self-limiting viral disease caused by a highly mutable virus. Contrary to live vaccines, vaccines produced by modern vaccine technologies fail to induce sterilizing immunity.

Abs is short hand for Anti-bodies. Vaccinal Abs means antibodies produced by such vaccines.

Those are chilling statements to anyone closely following the huge campaigns by the mainstream media and many governments to lockdown populations and insist upon mass vaccinations with the new technology mRNA Covid vaccines (never before used on humans) and the Viral Vector alternatives.

This article was published by him just last week.

Link: https://www.geertvandenbossche.org/post/c-19-pandemia-quo-vadis-homo-sapiens

and https://www.geertvandenbossche.org/

ISRAEL MUST OPEN MORE HOSPITALS

Despite being the most fully vaccinated nation of size on Earth, Israel is now seeing a worrying surge in Covid Cases. The nation has seen new case numbers skyrocketing in recent weeks from a few dozen a day to over 6,000 last Monday with another 5,755 diagnosed on Tuesday. New case numbers are already at half the levels that were seen in the first and second waves that occurred in September 2020 and in early 2021. Remember that in Septermber 2020, there were ZERO vaccinated.

Israel is about to embark on an urgent effort to expand hospital capacity after being presented with numbers showing that hospitalizations from new Covid Cases are likely to quadruple by mid-September.

It has been reported that they are hiring 100 more doctors, 500 nurses and 200 paramedical and support staff every 10 days to cope with the disease Tsunami coming their way. The new technology vaccines and their mass vaccination campaigns have clearly not provided the protection that was expected. BOOM is not surprised as the Absolute Risk Reduction provided by these vaccines is only in the range 0.7 % – 1.3 %.

Link –https://www.timesofisrael.com/health-officials-predict-thousands-of-seriously-ill-covid-patients-within-month/

From BOOM’s editorial dated 21st March this year —

On 26th February, the peer reviewed medical journal, Medicina, published an article by Dr Ronald Brown from the University of Waterloo, Canada. Dr Brown’s paper, titled “Outcome reporting bias in COVID-19 vaccine clinical trials” is also listed in the U.S. National Library of Medicine of the National Institutes of Health.

Unreported absolute risk reduction measures of 0.7% and 1.1% for the Pfzier/BioNTech and Moderna vaccines, respectively, are very much lower than the reported relative risk reduction measures. Reporting absolute risk reduction measures is essential to prevent outcome reporting bias in evaluation of COVID-19 vaccine efficacy.”

Dr Brown’s conclusion should rattle the entire planet —

Such examples of outcome reporting bias mislead and distort the public’s interpretation of COVID-19 mRNA vaccine efficacy and violate the ethical and legal obligations of informed consent.”

Source Links: https://www.mdpi.com/1648-9144/57/3/199 and https://pubmed.ncbi.nlm.nih.gov/33652582/

CRYPTO CRIME REPORT

More crime was reported in the world of Crypto during the week with a $ 600 Million heist.

Ho Hum — just another day in the Wild Wild West of Crypto.

The size of the theft was comparable to the $530 million in digital coins stolen from Tokyo-based exchange Coincheck in 2018. The Mt. Gox exchange, also based in Tokyo, collapsed in 2014 after losing half a billion dollars in bitcoin.”

Link: https://www.reuters.com/technology/defi-platform-poly-network-reports-hacking-loses-estimated-600-million-2021-08-11/

In economics, things work until they don’t. Until next week …………  Make your own conclusions, do your own research.  BOOM does not offer investment advice.

CLICK HERE FOR PODCASTS:   OUR BRAVE NEW ECONOMIC WORLD

HOW MOST MONEY IS CREATED

BANKS CREATE FRESH NEW MONEY OUT OF THIN AIR (but they always need a Borrower to do so)
THERE IS NO SUCH THING AS A DEPOSIT
BANKS PURCHASE SECURITIES, THEY DON’T MAKE LOANS
BANKS DON’T TAKE DEPOSITS, THEY BORROW YOUR MONEY

Watch this short 15 minutes video and learn as Professor Richard Werner brilliantly explains how the banking system and financial sector really work. 

Prof. Werner brilliantly explains how the banking system and financial sector really work. – YouTube


How is Most New Money Created ?

LOANS CREATE DEPOSITS — that is how almost all new money is created in the economy (by commercial banks making loans).

From the Bank of England Quarterly Bulletin Q1 2014    —
“Whenever a bank makes a loan, it simultaneously creates a matching deposit in the borrower’s bank account, thereby creating new money.

“Most money in the modern economy is in the form of bank deposits, which are created by commercial banks themselves”.

Youtube Video —  https://www.bankofengland.co.uk/quarterly-bulletin/2014/q1/money-in-the-modern-economy-an-introduction

and

https://www.bankofengland.co.uk/quarterly-bulletin/2014/q1/money-creation-in-the-modern-economy

Paper:  Money in the Modern Economy  PDF —  CLICK HERE

Quarterly Bulletins Index

http://www.bankofengland.co.uk/publications/Pages/quarterlybulletin/2014/qb14q1.aspx

Most economists are unaware of this and even ignore the banking & finance sectors in their econometric models.

On 25th April 2017, the central bank of Germany, the Bundesbank, released a statement on this matter —

“In terms of volume, the majority of the money supply is made up of book money, which is created through transactions between banks and domestic customers. Sight deposits are an example of book money: sight deposits are created when a bank settles transactions with a customer, ie it grants a credit, say, or purchases an asset and credits the corresponding amount to the customer’s bank account in return. This means that banks can create book money just by making an accounting entry: according to the Bundesbank’s economists, “this refutes a popular misconception that banks act simply as intermediaries at the time of lending – i.e. that banks can only grant credit using funds placed with them previously as deposits by other customers”. By the same token, excess central bank reserves are not a necessary precondition for a bank to grant credit (and thus create money).”

Reference: https://www.bundesbank.de/Redaktion/EN/Topics/2017/2017_04_25_how_money_is_created.html

The Reserve Bank of Australia (Australia’s central bank) has also contributed to the issue in a speech by Christopher Kent, the Assistant Governor on September 19th 2018.

“…… the vast bulk of broad money consists of bank deposits”
“Money can be created …….. when financial intermediaries make loans
“In the first instance, the process of money creation requires a willing borrower.” 
“It’s also worth emphasizing that the process of money creation is not the result of the actions of any single bank – rather, the banking system as a whole acts to create money.”

Disclaimer:   All content is presented for educational and/or entertainment purposes only. Under no circumstances should it be mistaken for professional investment advice, nor is it at all intended to be taken as such. The commentary and other contents simply reflect the opinion of the authors alone on the current and future status of the markets and various economies. It is subject to error and change without notice.The presence of a link to a website does not indicate approval or endorsement of that web site or any services, products, or opinions that may be offered by them.

Neither the information nor any opinion expressed constitutes a solicitation to buy or sell any securities nor investments. Do NOT ever purchase any security or investment without doing your own and sufficient research.  Neither BOOM Finance and Economics.com nor any of its principals or contributors are under any obligation to update or keep current the information contained herein. The principals and related parties may at times have positions in the securities or investments referred to and may make purchases or sales of these securities and investments while this site is live. The analysis contained is based on both technical and fundamental research.

Although the information contained is derived from sources which are believed to be reliable, they cannot be guaranteed.

Disclosure: We accept no advertising or compensation, and have no material connection to any products, brands, topics or companies mentioned anywhere on the site.

Fair Use Notice: This site contains copyrighted material the use of which has not always been specifically authorized by the copyright owner. We are making such material available in our efforts to advance understanding of issues of economic and social significance. We believe this constitutes a ‘fair use’ of any such copyrighted material as provided for in section 107 of the US Copyright Law. In accordance with Title 17 U.S.C. Section 107, the material on this site is distributed without profit. If you wish to use copyrighted material from this site for purposes of your own that go beyond ‘fair use’, you must obtain permission from the copyright owner.

==============================================================

MOLS Denmark

Covid Vaccines May not be Safe OR Effective — Swedish Economy Robust — Gold and Silver Under Pressure

THE COVID VACCINES MAY NOT BE SAFE OR EFFECTIVE

The current dominant narrative that “the vaccines will save us … and the economy will therefore recover” is an assumption. If it is true, then the economic future may well be bright. But if it is false, then the economic future will have to be re-assessed. False assumptions result in false conclusions.

BOOM has been a fan of Gail Tverberg and her Blog “Our Finite World” for many years. She has a strong following because she consistently writes excellent articles on economics and energy. But this week she has produced a review of the so-called Covid “vaccines”. Her article is called “Covid Vaccines Don’t Really Work as Hoped”. It is one of her finest efforts.

These injectables are much loved by politicians even though they are clearly far from ideal products. Along with the mainstream media, they continue to promote them ceaselessly by repeatedly calling them “safe and effective”. This statment is never qualified which implies that the products are 100 % safe and 100 % effective. However, many experts believe them to be far from safe and not very effective. In the clinical trials conducted in late 2020, for example, they produced absolute risk reductions of only 0.84 % – 1.3%. That means that they are hardly worth considering as society-wide preventive strategies against Covid 19. Relative risk reductions are used (frequently) to describe their effectiveness as “95%” but this is a mis-leading and fraudulent statement.

The truth concerning Covid vaccine effectiveness is being revealed in Israel, the most fully vaccinated nation of size. A BOOM correspondent described the situation beautifully — “the wheels are coming off in Israel, the most vaccinated country on Earth”.

He was referring to a statement by Dr Kobi Haviv, the director of the Herzog Hospital in Jerusalem. Herzog is the third largest hospital in the city. It specializes in care for the elderly. Dr Haviv stated that:

“95% of the severe patients are vaccinated

85-90% of the hospitalizations are in Fully vaccinated people

We are opening more and more COVID wards

The effectiveness of the vaccine is waning/fading out”

His statement deals with the lack of effectiveness that is becoming rapidly apparent in his hospital after only 6 months in a nation where the majority of adults have been vaccinated with the Pfizer jab.

In fact, in the general Israeli community, government stats reveal that 80 – 90 % of new Covid cases have also been fully vaccinated.

He did not comment on the lack of safety which is revealed in the Adverse Events Reports coming in to official government statistics from the US, Europe and the UK.

As of July 21st, the Total Deaths following Vaccination reported by families in those regions amount to 34,052. Total Vaccine Injuries Reported amount to almost 5.5 Million.

According to many studies, these numbers generated by self reporting systems probably represent somewhere between 1 – 10 % of the actual total. So we could be looking at 340,000 deaths or, worst case, perhaps 3.4 Million deaths. The worst case scenario for injuries could be 500 Million. These are staggering numbers to contemplate, especially if these products are not as effective as promoted.

If the vaccines are not effective after just 6 months and if their adverse event rate is being under-reported, then we have a two fold problem, both of which will make the economic future worse, not better. We could well be faced with more resistant variants of the virus combined with a large number of citizens incapacitated by death and chronic illness.

If, as some say, both the virus and the vaccines are effectively Bio-weapons delivering pathogenic Spike Proteins and Spike Protein fragments, then they are certainly the most effective Bio-weapons imaginable with the potential of damaging economies on a grand scale, not just once but permanently. The result could be a Tsunami of death and disease overwhelming hospitals and their medical staff simultaneously. The military forces could also become incapacitated and unable to effectively defend their respective nations.

So the possibility of the vaccines not being safe and not being effective must be seriously considered.

Read Gail’s article — here is the Link:

https://ourfiniteworld.com/2021/08/05/covid-19-vaccines-dont-really-work-as-hoped/

SWEDISH ECONOMY ROBUST

Ever since the Covid 19 phenomenon began, one nation has chosen common sense as the best policy setting. That nation is Sweden. They have not had strict lockdowns, mandated masks or rigid social distancing. They have tried to get on with life using the best judgement of their people. This is the opposite approach taken by many other advanced economies where Totalitarian “solutions” have been adopted.

So what has happened to the Swedish economy? Measured in GDP numbers, it has barely been affected over the time period. The moderate economic recession of 2020 has been completely reversed in 2021. In fact, its economy has now resumed economic growth. The economy is now bigger than its pre-pandemic size.

Its annual CPI inflation rate is low around 1.3 %. However, its unemployment rate is around 10 %. The good news is that business confidence is surging higher to record levels and consumer confidence is strong. Its stock market is roaring higher.

And what about the “horrible pandemic”, the “killer virus”, the “delta strain”? The Daily Death rate attributed to Covid is now close to Zero.

GOLD AND SILVER UNDER PRESSURE

On Friday, the US Dollar prices of Gold and Silver got hammered. Gold dropped 2.5 % on the day and Silver dropped 3.35 %. Over the last 12 months, Gold is clearly in a downtrend channel and Silver is trapped in a trading range with recent weakness suggesting the beginning of a downtrend. Platinum has been falling since March and fell ominously by 7.7 % on Friday.

It seems that investors cannot find any strong reason to buy these precious metals in present circumstances. Asset Price inflation is probably the strongest deterrent. Real estate and stocks are the place to be. Even Bonds are doing well lately, rising steadily in price since March.

Over the last 12 months the US Dollar index has effectively traded in a sideways range. So the weakness in precious metals prices cannot be explained by a stronger Dollar.

In economics, things work until they don’t. Until next week …………  Make your own conclusions, do your own research.  BOOM does not offer investment advice.

CLICK HERE FOR PODCASTS:   OUR BRAVE NEW ECONOMIC WORLD

HOW MOST MONEY IS CREATED

BANKS CREATE FRESH NEW MONEY OUT OF THIN AIR (but they always need a Borrower to do so)THERE IS NO SUCH THING AS A DEPOSIT
BANKS PURCHASE SECURITIES, THEY DON’T MAKE LOANS
BANKS DON’T TAKE DEPOSITS, THEY BORROW YOUR MONEY

Watch this short 15 minutes video and learn as Professor Richard Werner brilliantly explains how the banking system and financial sector really work. 

https://www.youtube.com/watch?v=EC0G7pY4wREhttp://


How is Most New Money Created ?

LOANS CREATE DEPOSITS — that is how almost all new money is created in the economy (by commercial banks making loans).

From the Bank of England Quarterly Bulletin Q1 2014    —
“Whenever a bank makes a loan, it simultaneously creates a matching deposit in the borrower’s bank account, thereby creating new money.

“Most money in the modern economy is in the form of bank deposits, which are created by commercial banks themselves”.

Youtube Video —  https://www.bankofengland.co.uk/quarterly-bulletin/2014/q1/money-in-the-modern-economy-an-introduction

and

https://www.bankofengland.co.uk/quarterly-bulletin/2014/q1/money-creation-in-the-modern-economy

Paper:  Money in the Modern Economy  PDF —  CLICK HERE

Quarterly Bulletins Index

http://www.bankofengland.co.uk/publications/Pages/quarterlybulletin/2014/qb14q1.aspx

Most economists are unaware of this and even ignore the banking & finance sectors in their econometric models.

On 25th April 2017, the central bank of Germany, the Bundesbank, released a statement on this matter —

“In terms of volume, the majority of the money supply is made up of book money, which is created through transactions between banks and domestic customers. Sight deposits are an example of book money: sight deposits are created when a bank settles transactions with a customer, ie it grants a credit, say, or purchases an asset and credits the corresponding amount to the customer’s bank account in return. This means that banks can create book money just by making an accounting entry: according to the Bundesbank’s economists, “this refutes a popular misconception that banks act simply as intermediaries at the time of lending – i.e. that banks can only grant credit using funds placed with them previously as deposits by other customers”. By the same token, excess central bank reserves are not a necessary precondition for a bank to grant credit (and thus create money).”

Reference: https://www.bundesbank.de/Redaktion/EN/Topics/2017/2017_04_25_how_money_is_created.html

The Reserve Bank of Australia (Australia’s central bank) has also contributed to the issue in a speech by Christopher Kent, the Assistant Governor on September 19th 2018.

“…… the vast bulk of broad money consists of bank deposits”
“Money can be created …….. when financial intermediaries make loans
“In the first instance, the process of money creation requires a willing borrower.” 
“It’s also worth emphasizing that the process of money creation is not the result of the actions of any single bank – rather, the banking system as a whole acts to create money.”

Disclaimer:   All content is presented for educational and/or entertainment purposes only. Under no circumstances should it be mistaken for professional investment advice, nor is it at all intended to be taken as such. The commentary and other contents simply reflect the opinion of the authors alone on the current and future status of the markets and various economies. It is subject to error and change without notice.The presence of a link to a website does not indicate approval or endorsement of that web site or any services, products, or opinions that may be offered by them.

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