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Image | Obama’s Budget is a Fantastic Comedy
Obama’s Budget is a Fantastic Comedy
by Chris Martenson

Fantasy or comedy?  I couldn’t decide which way to label the Obama budget, so I went with both.

The bottom line is that the Obama administration has brought forth the most unbelievable revenue increase that I have ever seen proposed in a budget, a whopping 65% increase in revenues in just four years, which will – miracle of miracles – drop the deficit as a percent of GDP from nearly 11% to just 3.2% over those same four years.

The only problem with this scenario is that it stands virtually no chance of actually happening. Revenue will be far lower than projected and the deficit correspondingly higher.

Obama’s Budget is a Fantastic Comedy
 by Chris Martenson

Fantasy or comedy?  I couldn’t decide which way to label the Obama budget, so I went with both.

The bottom line is that the Obama administration has brought forth the most unbelievable revenue increase that I have ever seen proposed in a budget, a whopping 65% increase in revenues in just four years, which will – miracle of miracles – drop the deficit as a percent of GDP from nearly 11% to just 3.2% over those same four years.

The only problem with this scenario is that it stands virtually no chance of actually happening. Revenue will be far lower than projected and the deficit correspondingly higher.

Image | Egypt’s Warning: Are You Listening?
Egypt’s Warning: Are You Listening?
by Chris Martenson

One day, a fruit and vegetable seller was arrested in Tunisia, sparking social unrest, and a few weeks later the government of Egypt was set to topple. 

Such is the nature of complex, chaotic, and unpredictable systems. The stresses build for years and years, and nothing really seems to be happening, but then everything suddenly changes. Egypt is therefore emblematic of what we might expect in any complex system in which pressures are building, such as the US Treasury market.  

Can events in complex systems ever be predicted? No…and yes. No, because the precise timing and details can never be predicted. Yes, because we can be certain that anything that is unsustainable will someday cease to continue and things that are horribly imbalanced will someday topple. We can also be certain that the change, when it comes, will be rather sudden and abrupt, rather than gentle and linear.

That is, we can easily predict that a complex system will shift, and that it will probably do so rapidly, but not exactly when or by how much.

Egypt’s Warning: Are You Listening?
 by Chris Martenson

One day, a fruit and vegetable seller was arrested in Tunisia, sparking social unrest, and a few weeks later the government of Egypt was set to topple. 

Such is the nature of complex, chaotic, and unpredictable systems. The stresses build for years and years, and nothing really seems to be happening, but then everything suddenly changes. Egypt is therefore emblematic of what we might expect in any complex system in which pressures are building, such as the US Treasury market.  

Can events in complex systems ever be predicted? No…and yes. No, because the precise timing and details can never be predicted. Yes, because we can be certain that anything that is unsustainable will someday cease to continue and things that are horribly imbalanced will someday topple. We can also be certain that the change, when it comes, will be rather sudden and abrupt, rather than gentle and linear.

That is, we can easily predict that a complex system will shift, and that it will probably do so rapidly, but not exactly when or by how much.

Image | Joe Saluzzi on High-Frequency Trading: The Equity Market Is Now Controlled by the Machines
Joe Saluzzi on High-Frequency Trading: The Equity Market Is Now Controlled by the Machines
by Chris Martenson

Joe Saluzzi, co-founder of Themis Trading LLC and outspoken exchange expert, is concerned with how high-frequency trading has brought the capital markets into uncharted – and dangerous – territory.

"Things have changed," he cautions. With 50-70% of all trades being conducted by algorithms at micro-second time intervals, real human traders are increasingly challenged to understand how our markets actually work. "No longer do the technical patterns – that have lasted for years and years, and are written about all over – work anymore."

In the following interview, Joe and Chris plunge into "dark pools" and other poorly-understood elements of our now-machine-dominated financial exchanges. The current system is fraught with risks of further "flash crash"-like disruptions, and at a fundmental level, feels a lot like sanctioned theft by the deep-pocketed institutions who can outspend on technology and speed. This is an important interview for anyone involved in trading (professionally or personally), as well as investors who want to know how today's markets truly operate.
Joe Saluzzi on High-Frequency Trading: The Equity Market Is Now Controlled by the Machines
 by Chris Martenson

Joe Saluzzi, co-founder of Themis Trading LLC and outspoken exchange expert, is concerned with how high-frequency trading has brought the capital markets into uncharted – and dangerous – territory.

"Things have changed," he cautions. With 50-70% of all trades being conducted by algorithms at micro-second time intervals, real human traders are increasingly challenged to understand how our markets actually work. "No longer do the technical patterns – that have lasted for years and years, and are written about all over – work anymore."

In the following interview, Joe and Chris plunge into "dark pools" and other poorly-understood elements of our now-machine-dominated financial exchanges. The current system is fraught with risks of further "flash crash"-like disruptions, and at a fundmental level, feels a lot like sanctioned theft by the deep-pocketed institutions who can outspend on technology and speed. This is an important interview for anyone involved in trading (professionally or personally), as well as investors who want to know how today's markets truly operate.
Image | How long can the party in stocks last?
How long can the party in stocks last?
by Chris Martenson

The headlines are screaming at the top of every financial media outlet tonight:  The Dow Closes Above 12,000 For the First Time in Two Years!

What’s going on here?  Is the recovery well and truly underway?   And, if it is, why is the Fed dropping hints again that “QE3 may get discussed” at future Fed meetings, as Kansas City Fed President Thomas Hoenig said on Feb 1st?

Given the raft of good economic news lately, one might be forgiven for wondering what the Fed has in mind here.  If everything is so economically rosy, why are they already dropping trial balloons about more Quantitative Easing?  What are they seeing that we are not seeing, that justifies more than $100 billion in thin air money each month, and why won’t they just tell us what it is? 

Here’s how PeakProsperity.com member dbworld put it earlier today:

How long can the party in stocks last?
 by Chris Martenson

The headlines are screaming at the top of every financial media outlet tonight:  The Dow Closes Above 12,000 For the First Time in Two Years!

What’s going on here?  Is the recovery well and truly underway?   And, if it is, why is the Fed dropping hints again that “QE3 may get discussed” at future Fed meetings, as Kansas City Fed President Thomas Hoenig said on Feb 1st?

Given the raft of good economic news lately, one might be forgiven for wondering what the Fed has in mind here.  If everything is so economically rosy, why are they already dropping trial balloons about more Quantitative Easing?  What are they seeing that we are not seeing, that justifies more than $100 billion in thin air money each month, and why won’t they just tell us what it is? 

Here’s how PeakProsperity.com member dbworld put it earlier today:

Image | Straight Talk with Catherine Austin Fitts: We Are Victims of A Financial Coup D’Etat
Straight Talk with Catherine Austin Fitts: We Are Victims of A Financial Coup D’Etat
by Chris Martenson

"Straight Talk" features thinking from notable minds that the PeakProsperity.com audience has indicated it wants to learn more about. Readers submit the questions they want addressed and our guests take their best crack at answering. The comments and opinions expressed by our guests are their own.

This week's Straight Talk contributor is Catherine Austin Fitts: investment advisor and entrepreneur. She is the founder of Solari Investment Advisory Services, where she offers subscribers guidance for navigating the risks of the global financial system and the political economy. (FYI: Chris will be the guest on her weekly podcast, The Solari Report, on Feb 3). Her perspective on Wall Street and Capitol Hill are shaped by her past roles as Assistant Secretary of Housing under George H. W. Bush, and before that, as Managing Director and board member for the investment bank Dillon, Read & Co. 

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1. Despite (or perhaps because of) your time as Assistant Secretary of Housing under Bush Sr., you are extremely critical of the government’s financial stewardship. What, if anything, changes with administrations and how much is institutionally baked into the cake?

The federal financial model is institutional, and its ultimate governance is outside of the government.

 

Straight Talk with Catherine Austin Fitts: We Are Victims of A Financial Coup D’Etat
 by Chris Martenson

"Straight Talk" features thinking from notable minds that the PeakProsperity.com audience has indicated it wants to learn more about. Readers submit the questions they want addressed and our guests take their best crack at answering. The comments and opinions expressed by our guests are their own.

This week's Straight Talk contributor is Catherine Austin Fitts: investment advisor and entrepreneur. She is the founder of Solari Investment Advisory Services, where she offers subscribers guidance for navigating the risks of the global financial system and the political economy. (FYI: Chris will be the guest on her weekly podcast, The Solari Report, on Feb 3). Her perspective on Wall Street and Capitol Hill are shaped by her past roles as Assistant Secretary of Housing under George H. W. Bush, and before that, as Managing Director and board member for the investment bank Dillon, Read & Co. 

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1. Despite (or perhaps because of) your time as Assistant Secretary of Housing under Bush Sr., you are extremely critical of the government’s financial stewardship. What, if anything, changes with administrations and how much is institutionally baked into the cake?

The federal financial model is institutional, and its ultimate governance is outside of the government.

 

Image | Interview with Jim Rogers: Why Inflation is Raging Worldwide and He Shorted US Treasury Bonds*
Interview with Jim Rogers: Why Inflation is Raging Worldwide and He Shorted US Treasury Bonds*
by Chris Martenson

"I see more inflation and more currency turmoil as we go forward. There are huge debt imbalances in the world. U.S. is the largest debtor nation in the world and all the assets are in Asia. The largest creditors in the world are China, Korea, Japan, Taiwan, Hong Kong, Singapore – this is where the assets are and the debts are in the West. Those imbalances have to be resolved. They frequently lead to more currency turmoil. We’ll see more inflation, we’ll see more governments fall. We just saw Tunisia fall – more are coming because the world is going to continue to have these problems, and especially inflation that is going to cause more social unrest."

So said investing legend Jim Rogers when he spoke recently with PeakProsperity.com about the inflationary pressures rising dramatically around the globe, despite some governments' best efforts to downplay them. Jim shares his "outside in" perspective on US monetary and fiscal policy, and how international players find themselves forced to react. He sees a lot of fundamental imbalances that need to be corrected for, as well as shortages of almost everything developing. In his words, "It's going to be a real mess before it's over."

 
Interview with Jim Rogers: Why Inflation is Raging Worldwide and He Shorted US Treasury Bonds*
 by Chris Martenson

"I see more inflation and more currency turmoil as we go forward. There are huge debt imbalances in the world. U.S. is the largest debtor nation in the world and all the assets are in Asia. The largest creditors in the world are China, Korea, Japan, Taiwan, Hong Kong, Singapore – this is where the assets are and the debts are in the West. Those imbalances have to be resolved. They frequently lead to more currency turmoil. We’ll see more inflation, we’ll see more governments fall. We just saw Tunisia fall – more are coming because the world is going to continue to have these problems, and especially inflation that is going to cause more social unrest."

So said investing legend Jim Rogers when he spoke recently with PeakProsperity.com about the inflationary pressures rising dramatically around the globe, despite some governments' best efforts to downplay them. Jim shares his "outside in" perspective on US monetary and fiscal policy, and how international players find themselves forced to react. He sees a lot of fundamental imbalances that need to be corrected for, as well as shortages of almost everything developing. In his words, "It's going to be a real mess before it's over."

 
Image | Inflation Is So Much Worse Than We’re Told
Inflation Is So Much Worse Than We’re Told
by Chris Martenson

Inflation is actually much higher than what the BLS claims it is; something that purchasers of college tuition, pharmaceuticals, or health insurance know all too well.

To give the BLS some credit, they must try and estimate a single rate of inflation that applies to everyone equally.  But that is a completely impossible task. An octogenarian living in Seattle on a meager pension and taking lots of prescription medications will have a totally different inflation experience than an 18 year old living in their parent’s basement eating Ramen noodles. 

But even after spotting the BLS some slack, there are some enormous and glaring errors in their methods that render the official inflation measure hopelessly – and dangerously – inaccurate. 

In this article, I am going to reveal how US inflation numbers are badly understated, how this practice short-changes institutions and fixed-income individuals alike, and why this means fiscal and inflationary train-wrecks are the most probable outcome for the US — and, by extension, the globe.

Inflation Is So Much Worse Than We’re Told
 by Chris Martenson

Inflation is actually much higher than what the BLS claims it is; something that purchasers of college tuition, pharmaceuticals, or health insurance know all too well.

To give the BLS some credit, they must try and estimate a single rate of inflation that applies to everyone equally.  But that is a completely impossible task. An octogenarian living in Seattle on a meager pension and taking lots of prescription medications will have a totally different inflation experience than an 18 year old living in their parent’s basement eating Ramen noodles. 

But even after spotting the BLS some slack, there are some enormous and glaring errors in their methods that render the official inflation measure hopelessly – and dangerously – inaccurate. 

In this article, I am going to reveal how US inflation numbers are badly understated, how this practice short-changes institutions and fixed-income individuals alike, and why this means fiscal and inflationary train-wrecks are the most probable outcome for the US — and, by extension, the globe.

Image | Straight Talk with Paul Kedrosky: Don’t Count on Technology To Save Us
Straight Talk with Paul Kedrosky: Don’t Count on Technology To Save Us
by Chris Martenson

"Straight Talk" features thinking from notable minds that the PeakProsperity.com audience has indicated it wants to learn more about. Readers submit the questions they want addressed and our guests take their best crack at answering. The comments and opinions expressed by our guests are their own.

This week's Straight Talk contributor is Paul Kedrosky. Paul is an investor, writer, entrepreneur and editor of the widely-followed econoblog Infectious Greed. He is a prolific engine of commentary on the economy, the markets, and society – often looking through the lens of how technology serves (and dis-serves) all three. Paul is also a Senior Fellow at the Kaufman Foundation, an advisor to Ten Asset Management, The Berkeley Center for Innovative Financial Technology, and other companies and venture capital firms. He tweets tirelessly via @pkedrosky.

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1. You spend your time focusing on the intersection of entrepreneurship, innovation and the future of risk capital. From your vantage point, what are the most important trends you see right now to be driving – or threatening – the advancement of our society?

The list is endless. High on that list, however, is financialization: the absurd, uneconomic and disastrous distortions introduced into the U.S. economy by its overreliance on the financial sector.

Straight Talk with Paul Kedrosky: Don’t Count on Technology To Save Us
 by Chris Martenson

"Straight Talk" features thinking from notable minds that the PeakProsperity.com audience has indicated it wants to learn more about. Readers submit the questions they want addressed and our guests take their best crack at answering. The comments and opinions expressed by our guests are their own.

This week's Straight Talk contributor is Paul Kedrosky. Paul is an investor, writer, entrepreneur and editor of the widely-followed econoblog Infectious Greed. He is a prolific engine of commentary on the economy, the markets, and society – often looking through the lens of how technology serves (and dis-serves) all three. Paul is also a Senior Fellow at the Kaufman Foundation, an advisor to Ten Asset Management, The Berkeley Center for Innovative Financial Technology, and other companies and venture capital firms. He tweets tirelessly via @pkedrosky.

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1. You spend your time focusing on the intersection of entrepreneurship, innovation and the future of risk capital. From your vantage point, what are the most important trends you see right now to be driving – or threatening – the advancement of our society?

The list is endless. High on that list, however, is financialization: the absurd, uneconomic and disastrous distortions introduced into the U.S. economy by its overreliance on the financial sector.

Image | Bill Fleckenstein: The Race to the Bottom Will Be Won by the Dollar
Bill Fleckenstein: The Race to the Bottom Will Be Won by the Dollar
by Chris Martenson

"This printing money is going to lead to huge trouble. It’s going to lead to higher interest rates. It’s going to lead to more inflation, and at some point there is going to be a train wreck in the currency and the bond market."

Market commentator and money manager Bill Fleckenstein sat down for a recent interview with PeakProsperity.com and excoriated the Fed and the monetary policy it's pursuing. He and Chris discuss the factors that enabled Bill to be one of the first to accurately identify and warn of the housing and credit bubbles – and how history is now repeating itself via the profligate printing of U.S. dollars. The interview covers a wide range of topics meaningful to the investor trying to make sense of where things are headed from here – including central banking culture, bubble psychology, high-frequency trading, inflation/deflation, and the true relative value of the dollar vs. the euro.
Bill Fleckenstein: The Race to the Bottom Will Be Won by the Dollar
 by Chris Martenson

"This printing money is going to lead to huge trouble. It’s going to lead to higher interest rates. It’s going to lead to more inflation, and at some point there is going to be a train wreck in the currency and the bond market."

Market commentator and money manager Bill Fleckenstein sat down for a recent interview with PeakProsperity.com and excoriated the Fed and the monetary policy it's pursuing. He and Chris discuss the factors that enabled Bill to be one of the first to accurately identify and warn of the housing and credit bubbles – and how history is now repeating itself via the profligate printing of U.S. dollars. The interview covers a wide range of topics meaningful to the investor trying to make sense of where things are headed from here – including central banking culture, bubble psychology, high-frequency trading, inflation/deflation, and the true relative value of the dollar vs. the euro.
Image | Bad Medicine: Dr. Marc Faber on Bernanke’s Quack Cures
Bad Medicine: Dr. Marc Faber on Bernanke’s Quack Cures
by Chris Martenson

"If there's one institution in the US that consistently and repeatedly messes up everything, the Federal Reserve is that institution."

So says famed investor Marc Faber in an interview he gave to PeakProsperity.com this week. In it, Chris and he dive deep into the Fed activity (encouraged by Washington and Wall Street) responsible for the current severe health of our economic system. Both feel that once you understand the nature of the critical role the Fed now plays, you have much better clarity into what the most probable outcomes for our economy and financial markets will be.
Bad Medicine: Dr. Marc Faber on Bernanke’s Quack Cures
 by Chris Martenson

"If there's one institution in the US that consistently and repeatedly messes up everything, the Federal Reserve is that institution."

So says famed investor Marc Faber in an interview he gave to PeakProsperity.com this week. In it, Chris and he dive deep into the Fed activity (encouraged by Washington and Wall Street) responsible for the current severe health of our economic system. Both feel that once you understand the nature of the critical role the Fed now plays, you have much better clarity into what the most probable outcomes for our economy and financial markets will be.
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