Wednesday, July 26, 2017

Trump Wants Low Interest Rates and a "Not Too Strong" Dollar

I have been warning in the EPJ Daily Alert that the dollar looks very weak at the present time and could break significantly lower in the not too distant future.

It looks like President Trump wants to help me with my forecast.

He told The Wall Street Journal yesterday:
 I do like low interest rates. I mean, you know, I’m not making that a big secret. I think low interest rates are good. I like a dollar that’s not too strong. I mean, I’ve seen strong dollars. And frankly, other than the fact that it sounds good, lots of bad things happen with a strong dollar. …

He also said he might reappoint Janet Yellen at the Fed, her term expires January 31, 2018 or he may go with another strong dollar hater Gary Cohn:
PRESIDENT TRUMP: I would say yes, she is in the running to stay.

WSJ: Is Gary [Cohn] a candidate? (Laughter.)

PRESIDENT TRUMP: He doesn’t know this, but yes, he is. (Laughter.)

WSJ: Are there other candidates?

PRESIDENT TRUMP: I actually think he likes what he’s doing right now.

WSJ: That’s what he tells us.

PRESIDENT TRUMP: Don’t tell Gary what I just said.

WSJ: Are there other candidates?

PRESIDENT TRUMP: Yeah, there are two or three. But she is – she is in the running, absolutely. I like her. I like her demeanor. I think she’s done a good job. I’d like to see rates stay low. She’s always been – you know, she’s historically been a low-interest-rate person, a believer.

WSJ: Do you have a time frame for announcing a decision?
  -RW

Former Plunge Protection Team Member Warns Quantum Computers Can Break a Bitcoin Password ii Less Than a Minute

EPJ friend  Pippa Malmgren, a former member of the Working Group on Financial Markets, aka The Plunge Protection Team, said during an interview with Erik Townsend on the MacroVoices podcast:
 So everybody in government circles have been watching the Indian experience because the prime minister stepped up to the platform in early November and basically said we are going to move all of you, a billion people, off paper money and onto electronic money, and we are going to do it in three months. They did it, and they did it successfully. Now governments everywhere are saying we want to do that because, guess what happens when you move to e-money. First of all, you really eliminate the black market because you can’t transact anymore without it being seen. And so, for example, the European Union are talking heavily about moving to electronic money because then all this black market activity that happens in Greece and Italy where there’s no tax, we will be able to get all that tax revenue off it. That’s one reason. The second reason is with blockchain you have total transparency over every single step of a transaction, complete providence of every single transaction. The question is who gets to see it. I think this is where governments are suddenly a little schizo because on the one side they think they are going to have the ability to see every transaction that you and I and all the listeners are engaged in, but Ethereum has created this platform where actually they won’t necessarily be in government’s hands, maybe in private hands.

The question is can you trust the private hands who are issuing Ethers as much or more as you trust governments. So governments are being to say let’s create our own version, and that’s where you get the PBOC saying we’ve got to control this. Because otherwise, you are going to end up with private sector currencies that possibly are trusted more than government currencies, and that will lead to transactions offline that governments can’t see. There was a report going around the Internet recently about some guy who made $200 million bucks trading on Ethereum in a month, and the question was who will tax that. The answer is nobody. That freaks governments out to say the least, particularly given their debt situation. So I think this is a huge, huge thing, and all investors have to think very carefully about it. I will say one last thing about it. You have got to get familiar with quantum computing, and there is loads of stuff on the net about it. But the reason it matters is because of the speed at which you can process information. We now have quantum computers. The Chinese apparently have the fastest. There is D-wave out of British Columbia, but basically you can break a block chain password or a Bitcoin password in like less than a minute if you have a quantum computer. The question is who is going to have them, and the answer is mainly governments but big corporations are buying them like crazy. Volkswagen just bought one. We are going to see major corporations buying that computer power.

The question then is who has most transparency over the block chain and e-money, and I would argue it is going to be whoever has the most and fastest processing  power, which may be governments at times, it may be private at times, it may be fluid. That’s what we have to think about as investors.
You are really delusional if you think Bitcoin or any other e-currency is going to protect your transactions from snooping eyes.

 -RW

Tuesday, July 25, 2017

Rand Paul on the State of the Obamacare Repeal Battle

Senate Republicans voted today to advance to floor debate on their efforts to repeal and replace Obamacare.

Vice President Mike Pence cast the tie-breaking vote.

As the vote began, lefty protesters in the Senate gallery shouted "kill the bill" and "shame, shame, shame!"

Senator Rand Paul put out this video update following today's vote:
  -RW


Rand Paul Wins on Obamacare


Let's just keep it this way.

No replacements!!

Set healthcare free!!

#FreeMarkets

 -RW

UPDATE:

Rand Paul on the State of the Obamacare Repeal Battle

State Dept Employee Arrested on Charges of Providing Chinese with US Analysis of Economic Talks with China

This arrest was just brought to my attention. It provides insight into the broad nature of state to state spying that goes well beyond spying on military topics.

Earlier this year, a federal grand jury indicted Candace Marie Claiborne for conspiring to defraud the U.S. government, concealing contact with foreign spies, obstructing an official proceeding, and making false statements to the FBI.

“Candace Marie Claiborne is a U.S. State Department employee who possesses a Top Secret security clearance and allegedly failed to report her contacts with Chinese foreign intelligence agents who provided her with thousands of dollars of gifts and benefits,” said Acting Assistant Attorney General McCord. “Claiborne used her position and her access to sensitive diplomatic data for personal profit. Pursuing those who imperil our national security for personal gain will remain a key priority of the National Security Division.”

According to the Department of Justice. Claiborne failed to report repeated contacts with two intelligence agents of the People’s Republic of China, even though these agents provided tens of thousands of dollars in gifts and benefits to Claiborne and her family over five years. According to the affidavit, the gifts and benefits included cash wired to Claiborne’s USAA account, an Apple iPhone and laptop computer, Chinese New Year’s gifts, meals, international travel and vacations, tuition at a Chinese fashion school, a fully furnished apartment, and a monthly stipend. Some of these gifts and benefits were provided directly to Claiborne, the affidavit alleges, while others were provided through a co-conspirator.

According to the affidavit, Claiborne noted in her journal that she could “Generate 20k in 1 year” working with one of the PRC agents, who, shortly after wiring $2,480 to Claiborne, tasked her with providing internal U.S. Government analyses on a U.S.-Sino Strategic Economic Dialogue that had just concluded.

The FBI arrested Claiborne on March 28.

At her court appearance, Claiborne pleaded not guilty.

 -RW


What is Unique About Socialism

Daniel Hannan, a member of the European Parliament and Secretary-General of the Alliance of European Conservatives and Reformists, is excellent here in 2013 at the Oxford Union.



 -RW

WARNING The US Dollar Could Crash if Gary Cohn is Named to Replace Janet Yellen at the Federal Reserve

There is much speculation in the financial media that current top Donald Trump economic adviser Gary Cohn may replace Janet Yellen as head of the Federal Reserve when her term as Fed chair expires on January 31, 2018.

In a recent Forbes column, John Tamny warns why this may be a big mistake and that Cohn, a former Goldman Sachs president, is in favor of a weak dollar policy:
[T]he dollar...looms as a reason for President Trump to not appoint Cohn. It does because of the perceptions it will create about the Administration’s stance on the matter...

 [I]t’s been reported by prominent sources that when he initially met with President-elect Trump ahead of the transition, Cohn indicated that a weak currency has a positive impact on the economy. Ok, but it doesn’t...

A policy of dollar devaluation would run counter to the very investment necessary for the businesses and jobs that the Administration would like to have materialize.

Applied to Cohn, ...his appointment to the central bank’s top spot would likely signal to markets that the Administration shares Cohn’s view that a weak dollar is in the best interests of the U.S., and worse, that it’s the Administration’s policy. To be blunt, if Trump embraces the discredited FDR, Nixon, Carter, Bush (43) policies in favor of a weak currency, his economic program will fail....

That Cohn wants the job of Fed Chairman is the surest sign that he, like Bernanke, wants to “accomplish things” while at the Fed. And that’s very dangerous. While the Fed’s relevance on a day to day basis is way overplayed, its role in the 2008 bailouts reminds us that on the odd days the Fed is capable of creating major damage. That Cohn plainly lusts for the job is a sign that he believes the Fed has expansive powers that need to be utilized. For that alone, Gary Cohn is the wrong choice for Fed Chairman.
Note, Tamny attempts to make the case in his column that the Federal Reserve does not play a role in causing a  weak dollar. This view is not one I hold. My excerpt from his column does not include that part of his commentary.

I consider Tamny's warning that Cohn is an advocate of a weak dollar policy the important part of his essay.

Also, it should be noted that, in the EPJ Daily Alert, I have recently started warning of a possible future dollar collapse. If speculation intensifies that Cohn will be named by President Trump to replace Yellen, the collapse of the dollar could accelerate sooner rather than later.

  -RW

Monday, July 24, 2017

Here’s What Red Capital Flight Looks Like



(via David Stockman)

Tyler Cowen vs. Mises on Art and the Common Man (And Nancy MacLean)

Tyler Cowen and his non-Misesian art

A Third Reason Nancy MacLean Owes Tyler Cowen an Apology

By Don Boudreaux


On page 290 of Democracy in Chains, Nancy MacLean writes that in 1998
[Tyler] Cowen had published a new book, In Praise of Commercial Culture, which elaborated on old shibboleths from Ludwig von Mises.
The good people at Harvard University Press, publisher of Tyler’s 1998 book, must be distraught to learn from MacLean that Tyler’s book merely “elaborated on old shibboleths” from a long-dead Austrian economist.
Fortunately, the Harvard University Press crowd can breathe easily, for MacLean’s description of Tyler’s book is wholly inaccurate: Nowhere in his book does Tyler mention Mises.
Why not?  There’s no doubt that Tyler has closely studied Mises’s works.  And there’s no doubt that Mises wrote about the connection between commerce and art.  And yet Tyler doesn’t

Rand Paul: Republican Health Bill 'A Porkfest, A Monstrosity'



Well, when you create a power center in government, crony operatives will attempt to influence that power center.

Government "healthcare" is such a power center.

"The Senate leadership bill that doesn’t repeal Obamacare, is Obamacare-lite and is loaded with pork, it’s become a porkfest where they’re dumping billions of dollars into pet projects for individual senators. I’m not for that," Rand said on Sunday on CNN’s State of the Union.

“I’ve told them I will vote for a motion to proceed if we proceed to a clean repeal vote. If it fails they can put up their monstrosity that they want to put forward, but I’m not for that because I’m not for the taxpayer subsidising private industry,” he continued.

 -RW

White House Indicates Trump Will Sign New Russian Sanctions Bill; EU Ready to Retaliate!!

More bizarre harassment of Russia.

The White House indicated Sunday President Donald Trump would sign a sweeping Russia sanctions measure, which the House could take up this week, that requires him to get Congress’ permission before lifting or easing the economic penalties against Moscow, reports The Washington Post.

Lawmakers are scheduled to consider the sanctions package as early as Tuesday, and the bill could be sent to Trump before Congress breaks for the August recess. The bill also calls for sanctions against Iran and North Korea.

"The administration is supportive of being tough on Russia, particularly in putting these sanctions in place,” White House press secretary Sarah Huckabee Sanders told ABC News. “The original piece of legislation was poorly written but we were able to work with the House and Senate. And the administration is happy with the ability to do that and make those changes that were necessary. And we support where the legislation is now."

Notes The New York Times:
The legislation may also have long-term consequences for the American relationship with Russia and for the power of the presidency. Once sanctions are written into law, they are much harder to lift, even long after the circumstances prompting them have changed, which is one reason European allies opposed the bill. And presidents from both parties have long resisted Congress’s inserting itself into the process of determining foreign policy through mandatory sanctions.
The broad-based nature of the sanctions is causing urgent concern amongst EU members.

The Financial Times reports:
Brussels is preparing to retaliate against the US if Washington pushes ahead with far-reaching new sanctions on Russia that hit European companies.

Jean-Claude Juncker, the European Commission president, has called for an urgent review of how Brussels should respond if Europe’s energy companies or other businesses are targeted by sanctions under discussion in the US Congress.

According to a note prepared for a commission meeting on Wednesday, and seen by the Financial Times, Brussels “should stand ready to act within days” if the US measures were “adopted without EU concerns being taken into account”...

The note says that Brussels’ “primary focus” should be on seeking “a public or written reassurance” from the Trump administration that it will not apply the new sanctions in a way that targets EU interests.

Other options set out in the EU commission note include using European law to prevent the US measures from being “recognised or enforceable” in Europe, and preparing “WTO-compliant retaliatory measures”.

The moves reflect deep concerns that the measures could hit European energy companies involved in Russia-related projects, including those engaged in the Nord Stream 2 initiative to build additional undersea natural gas pipelines between Russia and Germany...

Brussels is set to argue that the potential economic fallout for Europe from the planned US sanctions stretches far beyond that one project, warning that they could hit the “maintenance and upgrade” of pipelines in Russia that feed gas into Ukraine, as well as pipeline projects in the Caspian region and the development of a gasfield off the coast of Egypt.

In addition, the note warns, “the measures could impact a potentially large number of European companies doing legitimate business under EU measures with Russian entities in the railways, financial, shipping or mining sectors, among others.”
Trade improves relationships between countries, limitations on trade tend to increase hostilities.  Although, they are likely doing so only because of crony regional pressures.the EU is on the right side of the issue in objecting to the sanctions (though not so by considering retaliatorial  trade actions).

 -RW