Friday, May 6, 2022

Financial War Takes A Nasty Turn

 This is a long Post so if you don't have the time to read the full article, here's the conclusion: "It is the financial war which is going “nuclear”. Talk in the West of the military war escalating towards a physical nuclear war misses this point. China and Russia now realise they must protect themselves from the West’s looming currency and economic crisis as a matter of urgency. To fail to do so would simply ensure the crisis overwhelms them as well."

 The risks of a nuclear war are not nil as the possibilities for miscalculations are numerous but for now the key to understand the crisis is financial as this article explains in details.

Authored by Alasdair Macleod via GoldMoney.com,

The chasm between Eurasia and the Western defence groupings (NATO, Five-eyes, AUKUS etc.) is widening rapidly. While media commentary focuses on the visible side of the conflict in Ukraine, the economic and financial aspects are what really matter.

There is an increasing inevitability about it all. China has been riding the inflationist Western tiger for the last forty years and now that it sees the dollar’s debasement accelerating wonders how to get off. Russia perhaps is more advanced in its plans to do without dollars and other Western currencies, hastened by sanctions. Meanwhile, the West is increasingly vulnerable with no apparent alternative to the dollar’s hegemony.

By imposing sanctions on Russia, the West has effectively lined up its geopolitical opponents into a common cause against an American dollar-dominated faction. Russia happens to be the world’s largest exporters of energy, commodities, and raw materials. And China is the supplier of semi-manufactured and consumer goods to the world. The consequences of the West’s sanctions ignore this vital point.

In this article, we look at the current state of the world’s financial system and assess where it is headed. It summarises the condition of each of the major actors: the West, China, and Russia, and the increasing urgency for the latter two powers to distance themselves from the West’s impending currency, banking, and financial asset crisis.

We can begin to see how the financial war will play out.

The West and its dollar-based pump-and-dump system

The Chinese have viewed the US’s tactics under which she has ensured her hegemony prevails. It has led to a deep-seated distrust in her relationship with America. And this is how she sees US foreign policy in action.

Since the end of Bretton Woods in August 1971, for strategic reasons as much as anything else America has successfully continued to dominate the free world. A combination of visible military capability and less visible dollar hegemony defeated the communism of the Soviets and Mao Zedong. Aid to buy off communism in Africa and Latin America was readily available by printing dollars for export, and in the case of Latin America by deploying the US banking system to recycle petrodollars into syndicated loans. In the late seventies, banks in London would receive from Citibank yards-long telexes inviting participation in syndicated loans, typically for $100 million, the purpose of which according to the telex was invariably “to further the purposes of the state.”

Latin American borrowing from US commercial banks and other creditors increased dramatically during the 1970s. At the commencement of the decade, total Latin American debt from all sources was $29 billion, but by the end of 1978, that number had skyrocketed to $159 billion. And in early-1982, the debt level reached $327 billion.[i] We all knew that some of it was disappearing into the Swiss bank accounts of military generals and politicians of countries like Argentina. Their loyalty to the capitalist world was being bought and it ended predictably with the Latin American debt crisis.

With consumer price inflation raging, the Fed and other major central banks had to increase interest rates in the late seventies, and the bank credit cycle turned against the Latins. Banks sought to curtail their lending commitments and often (such as with floating-rate notes) they were paying higher coupon rates. In August 1982, Mexico was the first to inform the Fed, the US Treasury, and the IMF that it could no longer service its debt. In all, sixteen Latin American countries rescheduled their debts subsequently as well as eleven LDCs in other parts of the world.

America assumed the lead in dealing with the problems, acting as “lender of last resort” working with central banks and the IMF. The rump of the problem was covered with Brady Bonds issued between 1990—1991. And as the provider of the currency, it was natural that the Americans gave a pass to their own corporations as part of the recovery process, reorganising investment in production and economic output. So, a Latin American nation would have found that America provided the dollars required to cover the 1970s oil shocks, then withdrew the finance, and ended up controlling swathes of national production.

That was the pump and dump cycle which informed Chinese military strategists analysing US foreign policy some twenty years later. In 2014, the Chinese leadership was certain the riots in Hong Kong reflected the work of American intelligence agencies. The following is an extract translated from a speech by Major-General Qiao Liang, a leading strategist for the Peoples’ Liberation Army, addressing the Chinese Communist Party’s Central Committee in 2015:

“Since the Diaoyu Islands conflict and the Huangyan Island conflict, incidents have kept popping up around China, including the confrontation over China’s 981 oil rigs with Vietnam and Hong Kong’s “Occupy Central” event. Can they still be viewed as simply accidental?

I accompanied General Liu Yazhou, the Political Commissar of the National Defence University, to visit Hong Kong in May 2014. At that time, we heard that the “Occupy Central” movement was being planned and could take place by end of the month. However, it didn’t happen in May, June, July, or August.

What happened? What were they waiting for?

Let’s look at another timetable: the U.S. Federal Reserve’s exit from the Quantitative Easing (QE) policy. The U.S. said it would stop QE at the beginning of 2014. But it stayed with the QE policy in April, May, June, July, and August. As long as it was in QE, it kept overprinting dollars and the dollar’s price couldn’t go up. Thus, Hong Kong’s “Occupy Central” should not happen either.

At the end of September, the Federal Reserve announced the U.S. would exit from QE. The dollar started going up. Then Hong Kong’s “Occupy Central” broke out in early October.

Actually, the Diaoyu Islands, Huangyan Island, the 981 rigs, and Hong Kong’s “Occupy Central” movement were all bombs. The successful explosion of any one of them would lead to a regional crisis or a worsened investment environment around China. That would force the withdrawal of a large amount of investment from this region, which would then return to the U.S."

For the Chinese, there was and still is no doubt that America was out to destroy China and stood ready to pick up the pieces, just as it had done to Latin America, and South-East Asia in the Asian crisis in 1997. Events since “Occupy Central” will have only confirmed that view and explains why the Chinese dealt with the Hong Kong problem the way they did, when President Trump mounted a second attempt to derail Hong Kong, with the apparent objective to prevent global capital flows entering China through Shanghai Connect.

For the Americans the world is slipping out of control. They have had expensive wars in the Middle East, with nothing to show for it other than waves of displaced refugees. For them, Syria was a defeat, even though that was just a proxy war. And finally, they had to give up on Afghanistan. For her opponents, America has lost hegemonic control in Eurasia and if given sufficient push can be removed from the European mainland entirely. Undoubtedly, that is now Russia’s objective. But there are signs that it is now China’s as well, in which case they will have jointly obtained control of the Eurasian land mass.

Financial crisis facing the dollar

The geopolitics between America and the two great Asian states have been clear for all of us to see. Less obvious has been the crisis facing Western nations. Exacerbated by American-led sanctions against Russia, producer prices and consumer prices are not only rising, but are likely to continue to do so. In particular, the currency and credit inflation of not only the dollar, but also the yen, euro, pound, and other motley fiat currencies have provided the liquidity to drive prices of commodities, producer prices and consumer prices even higher. In the US, reverse repos which absorb excess liquidity currently total nearly $2 trillion. And the higher interest rates go, other things being equal the higher this balance of excess currency no one wants will rise.

And rise they will. The strains are most obvious in the yen and the euro, two currencies whose central banks have their interest rates stuck below the zero bound. They refuse to raise them, and their currencies are collapsing instead. But when you see the ECB’s deposit rate at minus 0.5%, producer prices for Germany rising at an annualised rate of over 30%, and consumer prices already rising at 7.5% and sure to go higher, you know they will all go much, much higher.

Like the Bank of Japan, the ECB and its national central banks through quantitative easing have assembled substantial portfolios of bonds, which with rising interest rates will generate losses which will drive them rapidly into insolvency. Furthermore, the two most highly leveraged commercial banking systems are the Eurozone’s and Japan’s with assets to equity ratios for the G-SIBs of over twenty times. What this means is that less than a 5% fall in the value of its assets will bankrupt the average G-SIB bank.

It is no wonder that foreign depositors in these banking systems are taking fright. Not only are they being robbed through inflation, but they can see the day when the bank which has their deposits might be bailed in. And worse still, any investment in financial assets during a sharply rising interest environment will rapidly lose value.

For now, the dollar is seen as a haven from currencies on negative yields. And in the Western world, the dollar as the reserve currency is seen as offering safety. But this safety is an accounting fallacy which supposes that all currency volatility is in the other fiat currencies, and not the dollar. Not only do foreigners already own dollar-denominated financial assets and bank deposits totalling over $33 trillion, but rising bond yields will prick the dollar’s financial asset bubble wiping out much of it.

In other words, there are currently winners and losers in currency markets, but everyone will lose in bond and equity markets. Add into the mix counterparty and systemic risks from the Eurozone and Japan, and we can say with increasing certainty that the era of financialisation, which commenced in the 1980s, is ending.

This is a very serious situation. Bank credit has become increasingly secured on non-productive assets, whose value is wholly dependent on low and falling interest rates. In turn, through the financial engineering of shadow banks, securities are secured on yet more securities. The $610 trillion of OTC derivatives will only provide protection against risk if the counterparties providing it do not fail. The extent to which real assets are secured on bank credit (i.e., mortgages) will also undermine their values.

Clearly, central banks in conjunction with their governments will have no option but to rescue their entire financial systems, which involves yet more central bank credit being provided on even greater scales than seen over covid, supply chain chaos, and the provision of credit to pay for higher food and energy prices. It must be unlimited.

We should be in no doubt that this accelerating danger is at the top of the agenda for anyone who understands what is happening — which particularly refers to Russia and China.

Russia’s aggressive stance

There can be little doubt that Putin’s aggression in Ukraine was triggered by Ukraine’s expressed desire to join NATO and America’s seeming acquiescence. A similar situation had arisen over Georgia, which in 2008 triggered a rapid response from Putin. His objective now is to get America out of Europe’s defence system, which would be the end of NATO. Consider the following:

  • America’s military campaigns on the Eurasian continent have all failed, and Biden’s withdrawal from Afghanistan was the final defeat.

  • The EU is planning its own army. Being an army run by committee it will lack focus and be less of a threat than NATO. This evolution into a NATO replacement should be encouraged.

  • As the largest supplier of energy to the EU, Russia can apply maximum pressure to speed up the political process.

The most important commodity for the EU is energy. And through EU policies, which have been to stop producing carbon-based energy and to import it instead, the EU has become dependent on Russian oil, natural gas, and coal. And by emasculating Ukraine’s production, Putin is putting further pressure on the EU with respect to food and fertiliser, which will become increasingly apparent over the course of the summer.

For now, the EU is toeing the American line, with Brussels instructing member states to stop importing Russian oil from the end of this year. But already, it is reported that Hungary and Slovakia are prepared to buy Russian oil and pay in roubles. And it is likely that while other EU governments will avoid direct contractual relationships with Russia, ways round the problem indirectly are being pursued.

A sticking point for EU governments is having to pay in roubles. Otherwise, the solution is simple: non-Russian, non-EU banks can create a Eurorouble market overnight, creating rouble bank credit as needed. All that such a bank requires is access to rouble liquidity to manage a balance sheet denominated in roubles. The obvious providers of rouble credit are China’s state-controlled megabanks. And we can be reasonably sure that at his meeting with President Xi on 4 February, not only would the intention to invade Ukraine have been discusseded, but the role of China’s banks in providing roubles for the “unfriendlies” (NATO and its supporters) in the event of Western sanctions against Russia will have been as well.

The point is that Russia and China have mutual geopolitical objectives, and what might have come as a surprise to the West was most likely agreed between them in advance.

The recovery in the rouble from the initial hit to an intraday low of 150 to the dollar has taken it to 64 at the time of writing. There are two factors behind this recovery. The most important is Putin’s announcement that the unfriendlies will have to pay for energy in roubles. But there was a subsidiary announcement that the Russian central bank would be buying gold. Notionally, this was to ensure that Russian banks providing finance to gold mines could gold and other related assets as collateral. But the central bank had stopped buying gold and accumulated the unfriendlies currencies in its reserves instead. This was taken by senior figures in Putin’s administration as evidence that the highly regarded Governor, Elvira Nabiullina, had been captured by the West’s BIS-led banking system.

Russia has now realised that foreign exchange reserves which can be blocked by the issuers are valueless as reserves in a crisis, and that there is no point in having them. Only gold, which has no counterparty risk can discharge this role. And it is a lesson not lost on other central banks either, both in Asia and elsewhere.

But this sets the rouble onto a different course from the unbacked fiat currencies in the West. This is deliberate, because while rising interest rates will lead to a combined currency, banking, and financial asset crisis in the West, it is a priority of the greatest importance for Russia to protect herself from these developments.

A new backing for the rouble

Russia is determined to protect herself from a dollar currency collapse. So far as Russia is concerned, this collapse will be reflected in rising dollar prices for her exports. And only last week, one of Putin’s senior advisors, Nikolai Patrushev, confirmed in an interview with Rossiyskaya Gazeta that plans to link the rouble to commodities are now being considered. If this plan goes ahead, the intention must be for the rouble to be considered a commodity substitute on the foreign exchanges, and its protection against a falling dollar will be secured.

We are already seeing the rouble trending higher, with it at 64 to the dollar yesterday. Figure 1 below shows its progress, in the dollar-value of a rouble.

Keynesians in the West have misread this situation. They think that the Russian economy is weak and will be destabilised by sanctions. That is not true. Furthermore, they would argue that a currency strengthened by insisting that oil and natural gas are paid for in roubles will push the Russian economy into a depression. But that is only a statistical effect and does not capture true economic progress or the lack of it, which cannot be measured. The fact is that the shops in Russia are well stocked, and fuel is freely available, which is not necessarily the case in the West.

The advantages for Russia are that as the West’s currencies sink into crisis, the rouble will be protected. Russia will not suffer from the West’s currency crisis, she will still get inflation compensation in commodity prices, and her interest rates will decline while those in the West are soaring. Her balance of trade surplus is already hitting new records.

There was a report, attributed to Dmitri Peskov, that the Kremlin is considering linking the rouble to gold and the idea is being discussed with Putin. But that’s probably a rehash of the interview that Nickolai Patrushev recorded with Rossiyskaya Gazeta referred to above, whereby Russia is considering fixing the rouble against a wider range of commodities. At this stage, a pure gold standard for the rouble of some sort would have to take the following into account:

  • History has shown that the Americans and the West’s central banks manipulate gold prices through the paper markets. To fix the rouble against a gold standard would hold it a hostage to fortune in this sense. It would be virtually impossible for the West to manipulate the rouble by intervening in this way across a range of commodities.

  • Over long periods of time the prices of commodities in gold grams are stable. For example, the price of oil since 1950 has fallen by about 30%. The volatility and price rises have been entirely in fiat currencies. The same is true for commodity prices generally, telling us that not only are commodities priced in gold grams generally stable, but a basket of commodities can be regarded as tracking the gold price over time and therefore could be a reasonable substitute for it.

  • If Russia has significant gold bullion quantities in addition to declared reserves, these will have to be declared in conjunction with a gold standard. Imagine a situation where Russia declares and can prove that it has more gold that the US Treasury’s 8,133 tonnes. Those who appear to be in a position to do so assess the true Russian gold position is over 10,000 tonnes. Combined with China’s undeclared gold reserves, such an announcement would be a financial nuclear bomb, destabilising the West.

  • For this reason, Russia’s partner, China, for which exporting semi-manufactured and consumer goods to the West is central to her economy activities, would prefer an approach that does not add to the dollar’s woes directly. The Americans are doing enough to undermine the dollar without a push from Asia’s hegemons.

Furthermore, a mechanism for linking the rouble to commodity prices has yet to be devised. The advantage of a gold standard is it is a simple matter for the issuer of a currency to accept notes from the public and to pay out gold coin. And arbitrage between gold and roubles would ensure the link works on the foreign exchanges. This cannot be done with a range of commodities. It will not be enough to simply declare the market value of a commodity basket daily. Almost certainly forex traders will ignore the official value because they have no means of arbitrage.

It is likely, therefore, that Russia will take a two-step approach. For now, by insisting on payments in roubles by the unfriendlies domestic Russian prices for commodities, raw materials and foods will be stabilised as the unfriendlies’ currencies fall relative to the rouble. Russia will find that attempts to tie the currency to a basket of currencies is impractical. After the West’s currency, banking, and financial asset crisis has passed then there will be the opportunity to establish a gold standard for the rouble.

The Eurasian Economic Union

While it is impossible to formally tie a currency which trades on the foreign exchanges to a basket of commodities, the establishment of a virtual currency specifically for trade settlement between jurisdictions is possible. This is the basis of a project being supervised by Sergei Glazyev, whereby such a currency is planned to be used by the member states of the Eurasian Economic Union (EAEU). Glazyev is Russia’s Minister in charge of integration and macroeconomics of the EAEU. While planning to do away with dollars for trade settlements has been in the works for some time, sanctions by the unfriendlies against Russia has brought about a new urgency.

We know no detail, other than what was revealed in an interview Glazyev gave recently to a media outlet, The Cradle [ii]. But the desire to do away with dollars for the countries involved has been on the agenda for at least a decade. In October 2020, the original motivation was explained by Victor Dostov, president of the Russian Electronic Money Association:

“If I want to transfer money from Russia to Kazakhstan, the payment is made using the dollar. First, the bank or payment system transfers my roubles to dollars, and then transfers them from dollars to tenge. There is a double conversion, with a high percentage taken as commission by American banks.”

The new trade currency will be synthetic, presumably price-fixed daily, giving conversion rates into local currencies. Operating rather like the SDR, state banks can create the new currency to provide the liquidity balances for conversion. It is a practical concept, which being relatively advanced in the planning, is probably the reason the Kremlin is considering it as an option for a future rouble.

That idea of a commodity basket for the rouble itself is bound to be abandoned, while a successful EAEU trade settlement currency can be extended to both the wider Shanghai Cooperation Organisation and the BRICS members not in the SCO.

China’s position

We can now say with confidence that at their meeting on 4 February Putin and Xi agreed to the Ukraine invasion. Chinese interests in Ukraine are affected, and the consequences would have had to be discussed.

The fact that Russia went ahead with its war on Ukraine makes China complicit, and we must therefore analyse the position from China’s point of view. For some time, America has attacked China’s economy, trying to undermine it. I have already detailed the position over Hong Kong, to which can be added other irritations, such as the arrest of Huawei’s chief financial officer in Canada on American instructions, trade tariffs, and the sheer unpredictability of trade policy during the Trump administration.

President Biden and his administration have now been assessed by both Putin and Xi. By 4 February their economic and banking advisors will have made their recommendations. Outsiders can only come to one conclusion, and that is Russia and China decided at that meeting to escalate the financial war on the West.

Their position is immensely strong. While Russia is the largest exporter of energy and commodities in the world, China is the largest provider of intermediate and consumer goods. Other than the unfriendlies, nearly all other nations are neutral and will understand that it is not in their interests to side with NATO, the EU, Japan and South Korea. The only missing piece of the jigsaw is China’s commoditisation of the renminbi.

Following the Fed’s reduction of its funds rate to the zero bound and its monthly QE increase to $120bn per month, China began to aggressively stockpile commodities and grains. In effect, it was a one-nation crack-up boom, whereby China took the decision to dump dollars. The renminbi rose against the dollar, but by considerably less than the dollar’s loss of purchasing power. This managed exchange rate for the renminbi appears to have been suppressed to relieve China’s exporters from currency pressures, at a time when the Chinese economy was adversely affected first by credit contraction, then by covid and finally by supply chain disruptions.

With respect to supply chains, current lockdowns in Shanghai and the logjam of container vessels in the Roads look set to emasculate Western economies with supply chain issues for the rest of the year. All we know is that the authorities are making things worse, but we don’t know whether it is deliberate.

It is increasingly difficult to believe that the financial and currency war is not being purposely escalated by the Chinese-Russian partnership. Having attacked Ukraine, the West’s response is undermining their own currencies, and the urgency for China and Russia to protect their currencies and financial systems from the consequences of a fiat currency crisis has become acute.

It is the financial war which is going “nuclear”. Talk in the West of the military war escalating towards a physical nuclear war misses this point. China and Russia now realise they must protect themselves from the West’s looming currency and economic crisis as a matter of urgency. To fail to do so would simply ensure the crisis overwhelms them as well.

 

Thursday, May 5, 2022

The Long, Lucrative & Bloody Road To World War 3

 Seeing the leadership in Brussels, London and Washington, it is hard to be optimistic about the long term prospects of our societies. Incompetence, senility and fanaticism are indeed not exactly the top characteristics you would expect of world leaders but then again, as George Carlin used to say: "This is it! It's the best we can do!"  

Authored by Connor Freeman via The Libertarian Institute, 

Well, this war in Ukraine will last “months and years.” At least, that is what the leaders of the D.C. foreign policy blob, the mediaPresident Joe Biden’s menPentagon and NATO leadership have decided. Their plan is to pour oil on the flames and keep the fire raging. Also, Americans are going to have to cough up the dough for another massive aid package, with $20 billion worth of weapons to keep the blood flowing. In total, this next package will cost the taxpayer $33 billion. With Biden’s proposed $813 billion “defense” budget for 2023, the U.S. is spending more on the military and war now than ever before in the country’s history.

Now that we have our very own Ministry of Truth, it would appear any national debate over these polices, indeed if such a debate is ever allowed to take place, will likely have to be moderated by cockroaches and Keith Richards.

NATO is set to expand again, bringing in Finland and Sweden. This will extend the alliance’s border with Russia by greater than 800 miles and further stoke nuclear tensions, bringing the current brinksmanship to a whole new level. Moscow plans to respond including by increasing air and naval forces in the Baltic Sea and reinforcing its Kaliningrad exclave, which lies between NATO members Poland and Lithuania, with additional nuclear weapons and hypersonic missiles. Until 2004, it was unthinkable that NATO would ever expand to Russia’s borders until that actually happened. Like most of our issues with Russia, this is all Bill Clinton and George W. Bush’s fault.

Even as Russia’s Foreign Minister Sergei Lavrov and other leaders in Moscow repeatedly warn of nuclear conflict and World War III, even directly comparing the current situation to the Cuban Missile Crisissenior Pentagon officials say they are not concerned.

Images: AP

Nor do our all-knowing rulers appear concerned with the fact that they have “almost zero” ability to keep track of the myriad sophisticated weapons systems they are sending to Ukraine. CNN quoted briefed sources saying intelligence shows American arms are falling into a “big black hole.” They say it’s worth it.

Nor do they seem to be concerned with the Russians’ warnings regarding how the West’s weapons flood in Ukraine threatens to expand the war into NATO territory and destabilize Europe. UK Foreign Secretary Liz Truss demands the West must “double down” on arms shipments, insisting particularly on “heavy weapons, tanks, airplanes—digging deep into our inventories, ramping up production. We need to do all of this.”

Our top diplomat Antony Blinken says the plan is regime change in Moscow, much like his boss did in March with his Polish “gaffe.” Ironically, the $47 billion in weapons and other U.S. aid pledged to Ukraine these last two months will soon surpass the State Department’s entire budgetEat your heart out, Netanyahu!

Secretary of Defense Lloyd Austin, former Raytheon board member, says the goal is to see Russia “weakened” to the point where it lacks even the capability to defend itself just outside its borders. As Pat Buchanan notes, this policy, whether its intended to or not, pressures the Kremlin to more seriously consider pulling its nuclear trigger.

“We want to see Russia weakened to the degree that it can’t do the kinds of things that it has done in invading Ukraine,” Austin said with a clear eye toward increasing Russian casualties and the long term destruction of Moscow’s conventional power.

Perhaps, Austin wants to cripple Russia so severely that his Pentagon can fight a war with China, the “most consequential strategic competitor and the pacing challenge for the Department,” without having to worry so much about Moscow—deemed a second tier “acute” threat, albeit one armed with roughly 6,000 nukes—getting involved.

Austin’s Raytheon pals are making a killing on this proxy war as well as the ancillary effects such as European NATO states, at long last, increasing their military spending.

As Ron Paul has written,

One group of special interests profiting massively on the war is the US military-industrial complex. Raytheon CEO Greg Hayes recently told a meeting of shareholders that, “Everything that’s being shipped into Ukraine today, of course, is coming out of stockpiles, either at DOD or from our NATO allies, and that’s all great news. Eventually we’ll have to replenish it and we will see a benefit to the business.”

He wasn’t lying. Raytheon, along with Lockheed Martin and countless other weapons manufacturers are enjoying a windfall they have not seen in years. The U.S. has committed more than three billion dollars in military aid to Ukraine. They call it aid, but it is actually corporate welfare: Washington sending billions to arms manufacturers for weapons sent overseas.

By many accounts these shipments of weapons like the Javelin anti-tank missile (jointly manufactured by Raytheon and Lockheed Martin) are getting blown up as soon as they arrive in Ukraine. This doesn’t bother Raytheon at all. The more weapons blown up by Russia in Ukraine, the more new orders come from the Pentagon.

Former Warsaw Pact countries now members of NATO are in on the scam as well. They’ve discovered how to dispose of their 30-year-old Soviet-made weapons and receive modern replacements from the U.S. and other western NATO countries.

There is scarcely a status quo to oppose. For weeks, escalations have continued apace. London has deployed SAS troops in Kiev to train Ukrainian troops on English anti-tank weapons. The U.S. is training Kiev’s troops in Germany and two other secret locations in Europe on heavy artillery, radar systems, and armored vehicles. Washington is expanding intelligence sharing with Kiev for its war with Russia in the Donbas, providing howitzers, vehicles to carry them, and an additional 144,000 artillery rounds. Poland is sending tanks to Ukraine, Slovenia has a plan to send large numbers of T-72 battle tanks as well. The Germans will be supplying anti-aircraft tanks to Kiev and the Pentagon says an unidentified European ally is providing Ukraine with warplanes.

London’s armed forces minister declared his government’s support for Kiev’s “completely legitimate” attacks inside Russia using British arms. This comes amid an uptick in reports of Ukrainian cross border drone and helicopter assaults including on Russian oil depotsresidential areas, and villages. The U.S. and its European allies are implementing a long term policy that looks to exile Russia, looking toward a new world order where they no longer seek to “coexist” with Moscow.

London wants Europe to cut off all Russian energy “once and for all,” which would make war more likely, impoverish innocent people, and cause massive recessions.

The U.S., NATO, and Russian presence in the Mediterranean Sea has reached Cold War levels, as NATO builds new Eastern European battlegroups.

In March, NATO Secretary General Jens Stoltenberg warned that any “use of chemical weapons would totally change the nature of the conflict, it would be a blatant violation of international law and would have far-reaching consequences.” This weekend, legislation for a new Authorization for the Use of Military Force (AUMF) has been introduced by Congressman Adam Kinzinger (R-IL). Kinzinger’s announcement calls the would be AUMF a “clear red line,” which would authorize Biden to deploy troops to Ukraine to fight Russians if Moscow should “use chemical, biological, and/or nuclear weapons.”

With the almost complete bipartisan Congressional support for the renewal of Lend-Lease and other anti-Russia, pro-war legislation, it is not outside the realm of possibility that this bill and its cynical redline trap becomes law.

For nearly two decades, Washington has funded “biological research” and other laboratories inside Ukraine. According to the head of the DoD’s Cooperative Threat Reduction Program, some of these labs may contain Soviet-era bioweapons.

As Dave DeCamp, news editor at Antiwar.com, has reported,

The Pentagon funds labs in Ukraine through its Defense Threat Reduction Agency (DTRA). According to a Pentagon fact sheet released last month, since 2005, the U.S. has “invested” $200 million in “supporting 46 Ukrainian laboratories, health facilities, and diagnostic sites.”

Moscow has accused Ukraine of conducting an emergency clean-up of a secret Pentagon-funded biological weapons program when Russia invaded. The World Health Organization said it advised Ukraine to destroy “high-threat pathogens” around the time of the invasion.

For their part, the U.S. maintains that the program in Ukraine and other former Soviet states is meant to reduce the threat of biological weapons left over from the Soviet Union. While downplaying the threat of the labs, Pentagon officials have also warned that they could still contain Soviet-era bioweapons.

Robert Pope, the director of the DTRA’s Cooperative Threat Reduction Program, told the Bulletin of the Atomic Scientists in February that the labs might contain Soviet bioweapons and warned that the fighting in Ukraine could lead to the release of a dangerous pathogen.

Much like previous Syrian redlines, this is practically the hawks’ invitation to bad actors seeking U.S. intervention to go ahead and launch an attack that could be plausibly blamed on our Hitler du jour to manufacture their desired casus belli.

It seems there may be ample sites somebody could hit that would cross Kinzinger’s cleverly drawn line in the sand. And much like the CIA, Turkey, and Saudi Arabia’s al Qaeda allies in Syria, the Azov Battalion and other Nazi groups, who have taken a humiliating beating thus far in the war, are prime candidates to launch a false flag.

If the American people do not wake up and demand an end to our government’s intervention in Ukraine, the U.S. may be directly entering this war soon.

If Russia was doing what the U.S. and its allies are doing in Ukraine, in Mexico or Canada, in addition to the unprecedented economic war being waged, these hawks in D.C. would have pulled the aforementioned nuclear trigger months ago.

Wednesday, May 4, 2022

EU Proposes Ban On Russian Oil Imports

 As discussed earlier, these unelected people are mad. They are ready to shout themselves in the foot to aggravate Russia. Each single step takes us closer to WW3.

EU Proposes Ban On Russian Oil Imports

Seemingly right on cue (and by that we mean less than two weeks after Emmanuel Macron won re-election in France, securing the European status quo), and shortly after the Germans acquiesced to demands for a gradual reduction in Russian oil imports, European Commission President Ursula von der Leyen announced plans for a phased ban on all Russian oil by the end of the year.

Commission President Ursula von der Leyen told the European Parliament this would be "a complete import ban on all Russian oil, seaborne and pipeline, crude and refined."

"We will make sure that we phase out Russian oil in an orderly fashion, in a way that allows us and our partners to secure alternative supply routes and minimises the impact on global markets," she said.

"This is why we will phase out Russian supply of crude oil within six months and refined products by the end of the year."

 In a proposed sixth round of sanctions aimed at pressuring President Putin, von der Leyen also said the bloc's executive body was also proposing to take Russia’s biggest bank, Sberbank, and two other Russian banks off the Swift financial-messaging system.

What's more, the European Commission is also planning to ban three major Russian state-owned broadcasters from the EU.

According to von der Leyen, EU member states will start discussing this latest sanctions package later Wednesday in Brussels. Ambassadors from the European Union's 27 member countries were expected to adopt the plans as early as this week, meaning the sanctions could soon become law, Reuters notes, although differences remain among member states about certain aspects of the proposals.

Oil prices jumped on the news, but the shift in spot prices doesn't entirely reflect the difficulties ahead, as Europe's scramble to replace Russian supplies will likely create serious problems in the international market, as they search for replacement sources from the Middle East, North Africa and the US.

The rise in prices also removes all the price-drop benefits of President Biden's massive SPR release plan to bring down US retail gasoline prices.

To be sure, a full embargo on Russian oil isn't a done deal yet: Hungary (seeking exemptions) has repeatedly warned it could veto an oil package that doesn’t allow Budapest enough time and financial assistance to set up the infrastructure needed to wean itself off Russian oil pipeline deliveries. Diplomats said at least two more member states, the Czech Republic and Bulgaria, have argued that if Hungary and Slovakia are given more time to stop buying Russian oil exports, they should be given the same leeway.

A trickier issue will be replacing Russian refined product imports, particularly so-called middle distillates. These include fuels such as diesel, fuel oil that runs heavy-duty vehicles and machinery, and inputs for petrochemicals. 

"The middle distillate market is extremely tight in most regions around the globe. Risks around Russian supply, lower Chinese exports, recovering demand following Covid, and limited ability of refiners to respond has meant that inventories in the US, Europe and Asia are at multiyear lows," ING strategist Warren Patterson said.

Von der Leyen delusionally noted at the conclusion of her speech that her proposal will "maximize pressure on Russia, while at the same time minimizing collateral damage to us and our partners around the globe." In reality, we fail to see how reduced supply at this time - and thus higher prices - does anything but hurt every other nation on earth (especially the poorest)... which perhaps explains why so many nations (including those with some of the lower GDP per person levels) refuse to go along with the West's plan to punish Putin.

Your Face Is Now A Weapon Of War (Privacy)

 This article about privacy is rather disturbing. Technology is neutral but the use we make of it is not and step by step we are lowering our standards while people remain unaware...

Authored by Stephanie Hare via National Interest,

Ukraine is using Clearview AI’s facial recognition technology to identify Russians, dead and alive, drawing on a database of billions of face images that it scraped from the internet without anyone’s consent.

Who owns your face? You might think that you do, but consider that Clearview AI, an American company that sells facial recognition technology, has amassed a database of ten billion images since 2020. By the end of the year, it plans to have scraped 100 billion facial images from the internet. It is difficult to assess the company’s claims, but if we take Clearview AI at face value, it has enough data to identify almost everyone on earth and end privacy and anonymity everywhere.

As you read these words, your face is making money for people whom you’ve never met and who never sought your consent when they took your faceprint from your social media profiles and online photo albums. Today, Clearview AI’s technology is used by over 3,100 U.S. law enforcement agencies, as well as the U.S. Postal Service. In Ukraine, it is being used as a weapon of war. The company has offered its tools free of charge to the Ukrainian government, which is using them to identify dead and living Russian soldiers and then contact their mothers.

It would be easy to shrug this off. After all, we voluntarily surrendered our privacy the moment we began sharing photos online, and millions of us continue to use websites and apps that fail to protect our data, despite warnings from privacy campaigners and Western security services. As so many of us sympathize with Ukraine and are appalled by Russia’s brutality, it is tempting to overlook the fact that Ukraine is not using Clearview AI to identify dead Ukrainians, which suggests that we are witnessing the use of facial recognition technology for psychological warfare, not identification. Some people will be fine with the implications of this: if Russian mothers have to receive disturbing photos of their dead sons, so be it.

To understand why we might want to rethink the use of facial recognition technology in conflict, consider the following thought experiments. First, imagine that it was Russia that had scraped Ukrainian biometric data from the internet to build a facial recognition technology tool which it was using to identify dead Ukrainians and contact their mothers. Liberal democracies would likely condemn these actions and add them to its growing list of Russia’s barbaric actions. Second, imagine a conflict in which the United States was fighting against an opponent who had taken American faceprints to train its facial recognition technology and was using it to identify dead American soldiers and contact their mothers. This would almost certainly cause howls of protest across the United States. Technology executives would be vilified in the press and hauled before Congress, where lawmakers might finally pass a law to protect Americans’ biometric data.

We do not need to wait for these scenarios to occur; Congress could act now to protect Americans’ biometric data. If taking inspiration from the European Union (EU) General Data Protection Regulation (GDPR) seems a step too far, Congress only needs to look to Illinois, whose Biometric Information Privacy Act (BIPA) requires that companies obtain people’s opt-in consent before capturing facial images and other biometrics. Clearview AI is currently fighting multiple lawsuits in federal and state courts in Illinois for failing to obtain users’ consent. These lawsuits highlight a troubling aspect of facial recognition technology in the United States: Americans’ privacy, civil liberties, and rights over their biometric data vary from state to state, and even within states, and are not protected by federal law.

To remedy this problem, Congress could also look to several U.S. allies, including three of its Five Eyes intelligence-sharing partners. In 2021, Canada’s privacy commissioner identified Clearview AI as a tool of mass surveillance and declared it illegal, while British and Australian data regulators fined Clearview AI and ordered it to delete their citizens’ data. In the EU, Italy recently fined Clearview €20 million, ordered it to delete all of the data that it had collected from Italian citizens, and prohibited Clearview AI from collecting more data. Last year, Sweden fined police authorities for using Clearview AI’s technology to identify people, and a number of privacy, civil liberties, and human rights groups filed complaints against the company with data regulators in France, Austria, and Greece. Unsurprisingly, in May 2021, Clearview AI said it had no EU-based customers.

For all of Clearview AI’s many flaws, the challenge free-societies face is about more than the actions of one company. Many companies and governments are using similar means to create the same tools, such as PimEyes, FindClone, and TrueFace. Liberal democracies can regulate them, but currently, there is nothing preventing adversaries from capturing our faces and other biometric data. Failing to act could endanger soldiers, security personnel, and law enforcement officers, as well as civilian populations. It is time to confront this challenge head-on.

Monday, May 2, 2022

This is why we can't have nice things (Video)

 This is Golden Week in Japan. A time for holiday, a time for thinking. 

 So here it is: "Why can't we have nice things?" As we are surrounded with crap from China and bombarded with ecological nonsense, this is a very important question to ask. The answer to this question will determine if we can actually reinvent our society and build something different, more sustainable.


 

The Syria The Media Won't Show You (Video)

 Look at this documentary on Syria. Simply astounding and so different from what we hear in the West. Far from war, propaganda and hype, reality in a real country.

 We live in a time where it pays to keep your mind open. Believe no one, check everything and be amazed.

 I remember having exactly the same experience the first time I went to Istanbul. The Turks were not only "nice" but kind and friendly. The city a true, ancient bridge between East and West.


 

Sunday, May 1, 2022

Covid the China way! (Video)

 This is a very long podcast so you do not need to see it all. But just the beginning gives a good taste not only of what the Chinese policy about Covid is but what the dystopia China has become under Xi Jinping. China is back to the dark days of Mao Zedong but with the help of technology, cameras and social credit, which makes the nightmare even worse. And there is no escape... 

 The other point is that China is preparing for war... Let's keep this in mind!


 

 

 

‘What I’ve Seen in the Last 2 Years Is Unprecedented’: Physician on COVID Vaccine Side Effects on Pregnant Women

 MD and Physicians are "talking". (See the tens of thousands who have signed the Great Barrington Declaration.) But relentless propaganda is shutting them down. Likewise below. Nothing to worry about concerning the vaccine? 

 PS: All this was predicted by doctors two years ago. It was a conspiracy then and cancelled on Social Media. What is it now? Statistics?

Via Epoch Times

Former Pfizer VP: ‘Adverse impacts on conception and ability to sustain a pregnancy were foreseeable’

Stock photo of a pregnant woman holding her stomach. (Arteida Mjeshtri/Unsplash)

Dr. James Thorp is an extensively published 68-year-old physician MD board-certified in obstetrics and gynecology, as well as maternal-fetal medicine, who has practiced obstetrics for over 42 years.

Thorp told The Epoch Times that he sees 6,000–7,000 high-risk pregnant patients a year and has seen many complications among them due to the COVID vaccines.

“I’ve seen many, many, many complications in pregnant women, in moms and in fetuses, in children, offspring,” Thorp said, “fetal death, miscarriage, death of the fetus inside the mom.

“What I’ve seen in the last two years is unprecedented,” Thorp asserted.

Thorp explained that although he has seen an increase in fetal death and adverse pregnancy outcomes associated with the COVID-19 vaccination, attempts to quantify this effect are hampered by the imposition of gag orders on physicians and nurses that were imposed in September 2021, as reviewed in the publication “Patient Betrayal: The Corruption of Healthcare, Informed Consent and the Physician-Patient Relationship” (pdf).

At the beginning of January, the FDA was ordered to release its first large batch of documents related to Pfizer’s COVID jab trials, of which over 10,000 of about 450,000 pages have been made public so far.

From the first day of the Pfizer-BioNTech vaccine rollout on Dec. 1 2020 through Feb. 28, 2021, 1,223 deaths and 42,086 adverse events were reported to Pfizer.

Among the adverse events, particularly alarming are the ones that affected pregnant women. The documents say that there were 274 pregnancy adverse events, of which 75, or 27 percent were “serious.”

“49 non-serious and 75 serious, reported clinical events, which occurred in the vaccinated mothers. Pregnancy related events reported in these cases coded to the [patients] Abortion spontaneous (25), Uterine contraction during pregnancy, Premature rupture of membranes, Abortion, Abortion missed, and Foetal death (1 each). Other clinical events which occurred in more than 5 cases coded to the [patients] Headache (33), Vaccination site pain (24), Pain in extremity and Fatigue (22 each), Myalgia and Pyrexia (16 each), Chills (13) Nausea (12), Pain (11), Arthralgia (9), Lymphadenopathy and Drug ineffective (7 each), Chest pain, Dizziness and Asthenia (6 each), Malaise and COVID-19 (5 each),” reads the previously confidential Pfizer documents (pdf).

The CDC website recommends the COVID vaccines during pregnancy in order to “prevent severe illness and death in pregnant women.”

The American College of Obstetricians and Gynecologists (ACOG) also “strongly recommends that pregnant individuals be vaccinated against COVID-19,” adding that pregnant women’s complete vaccination should be a “priority.”

Thorp repeatedly emphasized that it’s not that everybody got their shots when the vaccine was first distributed.

“They were not all administered [on Dec 1, 2020,]” Thorp said. “All the lots that were sent out were deep-frozen on-site and then they were administered slowly over that eight weeks.”

The amount of BioNTech vaccines shipped worldwide at the time has been redacted in the aforementioned document.

Why did they redact that? That would have been unbelievable information that would give you the exact numerator and denominator,” Thorp said.

The “general overview” table says that there were 29,914 “cases” related to females, 9,182 in males, and 2,990 people with “no data,” of which 19,582 are “recovered/recovering,” 11,361 “not recovered at the time of the report” and 1,223 “fatal.”

Former Pfizer VP Had Given Warnings

Michael Yeadon is a big pharma veteran with 32 years in the industry. He retired from Pfizer whilst occupying the most senior research position in that field.

“On December 1, 2020, We detailed a series of mechanistic toxicology concerns which we believed were reasonable to hold, unless & until proven not to occur,” Yeadon said in a statement to The Epoch Times.

“Among those was that adverse impacts on conception and ability to sustain a pregnancy were foreseeable.”

“It’s important to note that none of these gene-based agents had completed what’s called ‘reproductive toxicology.’ Over a year later, this battery of tests in animals still has not been done. So there was and still is no data package supporting safety in pregnancy or prior to conception.”

Dr. Wolfgang Wodarg and Yeadon detailed the concerns on the issue: the spike protein from the virus encoded in the vaccines was related to a minor extent to syncytin that plays a crucial part in the carrying of a baby to term.

Yeadon had hoped, back then, that their concerns were paid attention to, since they had already seen the tragedy of thalidomide, a sedative drug that caused congenital malformation, over 60 years ago.

“During 2021, I came across two further pieces of evidence which made it much more likely that there’d be adverse effects on pregnancy from COVID-19 ‘vaccines.’”

“It looked like someone had tried to dismiss our concerns by testing for evidence of the particular problem we’d warned about in Dec. 2020. Unfortunately, all they did is to reinforce our concerns. We’d envisioned the risk that, in responding to the synthetic piece of virus spike protein, women’s immune systems would also make an immune response to their own placental protein,” Yeadon said. “That’s exactly what was reported in the pre-print paper.”

“Based on this concern alone, all of these experimental products as a class should have been completely contraindicated in women younger than menopause.”

mRNA Products Accumulate in Ovaries

Another concern that they had not initially noticed was that “the mRNA products (Pfizer & Moderna) would accumulate in ovaries,” Yeadon stated.

“An FOI request to the Japanese Medicines Agency revealed that product accumulation in ovaries occurred in experiments in rodents. I searched the literature based on these specific concerns and found a 2012 review, explicitly drawing attention to the evidence that the lipid nanoparticle formulations as a class do, in fact, accumulate in ovaries and may represent an unappreciated reproductive risk to humans. This was ‘a well known problem’ to experts in that field.”

A 2012 study says that after testing with different mouse species and Wistar rats, “a high local accumulation of nanoparticles, nanocapsules and nanoemulsions in specific locations of the ovaries was found in all animals.”

Referring to the study, Yeadon told The Epoch Times that “The authors tell untruths. They say something like ‘there was no increase in anti-syncytin-1 antibodies.’”

“No, that’s wrong. Their data is clearly 2.5X increased after vaccination and obviously statistically significant (functional significance is looking confirmed by the miscarriage rate),” Yeadon noted.

“What they’ve done is cute. They’ve chosen a completely arbitrary level they scribed on the figure below which they claim nothing matters. No evidence whatsoever for that claim. In fact, in the discussion, they confess we don’t know the relationship between antibodies and the impact on function.”

The former Pfizer VP believes that the pharmaceutical industry “definitely knew,” since 2012, that the lipid nanoparticles would accumulate in the ovaries of women that took the vaccines.

“No one in the industry or in leading media could claim ‘they didn’t know about these risks to successful pregnancy.’”

A lipid nanoparticle is an extremely small particle, it’s a fat-soluble membrane that is the cargo of the messenger RNA, Thorp said.

Epoch Times Photo
Dr. James Thorp (Courtesy of James Thorp)

“From data that we have, there appears to be a concentration of the lipid nanoparticles, which are very, very small particles, which are in the vaccine that are injected into the arm,” Thorp said, “and then the vast majority of those are dispersed throughout the entire body.”

“They appear to concentrate in the ovaries, and they appear to cross all God-made barriers in the human body, the blood-brain barrier, the placental barrier during pregnancy, into the fetal bloodstream, and all the fetal tissues inside the womb, crossing the blood-brain barrier in the fetus, the baby in the womb, which is very concerning,” he noted, since the eggs produced by women are limited in number, and they would be “exposed to a potentially disastrous toxic lipid nanoparticle.”

Dr. Christiane Northrup is a board-certified obstetrician-gynecologist with more than 30 years of experience and the former president of the American Holistic Medical Association. She also served on their board during the 80s and early 90s.

She told The Epoch Times last October about how were women being affected by the vaccines.

“Women are having bleedings. The doctors in our area are doing hysterectomies in young women, like 30-somethings, they said, ‘Oh, it’s not unusual.’ Let me tell you, as a board-certified gynecologist, that’s very unusual. Women’s periods are messed up all over the place … I’ve had a huge Facebook group of thousands of women talking about this situation that was removed,” Northrup said.

Epoch Times Photo
Dr. Christiane Northrup speaks at Broadway Rally For Freedom in Manhattan, New York, on Oct. 16, 2021. (Enrico Trigoso/The Epoch Times)

“My profession is famous for embracing treatments that later on turn into disasters: For example the drug thalidomide that results in limb effects in hundreds of babies, the Dalkon shield IUD that was touted as the birth control method of choice for women who had never had children—and then made hundred of them sterile from infection. And of course, there is DES (diethylstilbestrol) that was given to thousands of women for nausea of pregnancy—and results in reproductive abnormalities in both male and female offspring—including sterility,” Northrup added on Tuesday.

Pfizer and Moderna did not respond to requests for comment.

Thursday, April 28, 2022

Yen Craters To 20 Year Low As BOJ Stuns Markets With Daily Fixed-Rate Operations To Defend YCC

 A long, long time ago, Japan was on the verge of overtaking the American economy. Then in 1990 the bubble popped. In 2000, the Japanese income per person was still 5 times higher than Korea. Today, Korea is above Japan on PPP (purchase parity prices)... and it won't stop there.

 Today the choice is between crashing the economy and crashing the Yen. As the Bank of Japan just announced: It will be the Yen. It makes sense. There is really no choice left. But in 10 years, it is Vietnam that will overtake Japan!

 I wonder if Japan will congratulate Mr Kuroda by then for avoiding tough decisions for so long? In 2022 already, Japan is importing gas from Russia, manufactured goods from China and 60%+ of its food from abroad while its population and industry are crashing. The cliff ahead is already spectacular. A very likely major earthquake will make it twice as high still... 

Yen Craters To 20 Year Low As BOJ Stuns Markets With Daily Fixed-Rate Operations To Defend YCC

It was a little over a month ago - on March 24 - when we first laid out the big dilemma facing the Bank of Japan, which on one hand was hoping to avoid a currency collapse (for obvious reasons) and prevent a crash in the yen, while on the other hand, was also hoping to keep the 10Y yield below its extremely dovish 0.25% yield curve control rate ceiling. The problem is that while the BOJ can control one or the other, it can't control both; this is what we said then: 

Japan, that paragon of MMT crackpots everywhere, suddenly finds itself trapped in a lose-lose dilemma: intervene in the bond market and spark a furious, potentially destabilizing and uncontrolled plunge in the yen which would also lead to galloping (if not worse) inflation, which could collapse what little faith remains in the BOJ, or do nothing and contain the slump in the yen while risking far higher yields which in a country where the debt is orders of magnitude greater than GDP, could also spell fiscal and monetary doom.

As a result, the market - having long gotten used to amicable interventions from the BOJ - will now surely test one of these two outcomes, and how the BOJ responds could have dramatic consequences for this original MMT test case. Should the BOJ's reaction spark further erosion of faith in either Japan's fiscal or monetary policies, the outcome for the world's most indebted nation would be disastrous.

Sure enough, the market did test both outcomes, and after pushing the 10Y JGB yield to the upper bound of the YCC corridor of 0.25% and finding the BOJ willing to defend Japanese yields from further spikes, decided to focus its hammering on the yen instead, pushing it to two decade lows.

It's also why we were paying particularly close attention to what the BOJ would announce in its decision early on Thursday - would it double down on Yield Curve Control defense, or would it finally turn its attention to the crashing yen and prop it up, perhaps by extending the YCC ceiling from 0.25% to 0.50% or higher (in line with what all other developed central banks are doing)?

Well, we got the answer and it was a doozy: the Bank of Japan on Thursday sparked a furious sell-off in the yen (and also the yuan) after shocking the market by doubling down on its Yield Curve Control and keeping its loose monetary policy intact, despite the crashing of the yen and growing pressure of inflation due to costlier imports.

The yen cratered below 130 against the U.S. currency for the first time in 20 years in afternoon trading in Tokyo, when rather than introducing flexibility to its monetary policy, the central bank in a statement reiterated its commitment to the 10-year yield target, saying it will conduct an unlimited fixed-rate operation to buy 10-year Japanese government bonds at 0.25% every day, effectively ensuring a currency collapse.

Specifically, the BOJ maintained the status quo across all monetary policy parameters, including yield curve control (YCC), asset purchase programs, and forward guidance (some market observers were expecting adjustments to forward guidance). The central bank decided by an 8-1 majority vote to maintain the YCC, and by a unanimous vote to maintain guidelines for asset purchases. In regard to YCC, BOJ member Kataoka cast the dissenting vote (as he usually does), saying that it was desirable to lower short- and long-term interest rates "with a view to encouraging firms to make active business fixed investment for the post-COVID-19 era."

In a separately released economic outlook report, the board members offered a median forecast of sharply higher inflation coming at 1.9% for fiscal 2022, compared with 1.1% predicted just three months ago, and 1.1% for the next fiscal year. Economic growth is forecast to slow sharply to 2.9% for the current fiscal year, versus 3.8% predicted three months ago. The BOJ’s outlook assumes core CPI inflation will continue to fall short of the inflation target of +2%, calling for +1.1% in both FY2023 and FY2024, while it expects new core CPI inflation (excludes fresh food and energy) to grow steadily, calling for +0.9% in FY2022, +1.2% in FY2023, and +1.5% in FY2024, respectively.

But the highlight, as noted above, is what the BOJ said regarding YCC, where it explicitly added to the statement that “the Bank will offer to purchase 10-year JGBs at +0.25% every business day through fixed-rate purchase operations, unless it is highly likely that no bids will be submitted” cementing the bank's commitment to keeping yields in the world' most indebted country (relatively speaking) at or below 0.25% 

On policy rates, the BOJ maintained forward guidance indicating that it “expects short- and long-term policy interest rates to remain at their present or lower levels.” Commenting on the move, Goldman said that "while the BOJ introduced daily fixed-rate operations to keep consistency with this forward guidance, in our view, we think the market is likely to view it as a strong dovish message. Indeed, post the MPM, the 10-year yield is down and the yen depreciated against the US dollar."

It sure is, but more on that in a second.

  • Speaking at a press conference later in the day, BOJ Governor Kuroda focused on the two key issues: inflation and the daily fixed-rate ops. Here are the highlights:
  • Kuroda said "It Will Take Some Time to Get Sustainable Inflation" adding that current cost-push inflation will not be sustained as oil prices won’t keep rising.
  • Kuroda said that "while inflation will rise temporarily to 2%, it won’t last as the effect of energy prices will ease", that ""Inflation expectations are rising, but are centered on the short-term"
  • The BOJ governor emphasized that the surge in inflation is not sustainable, saying "cost-push inflation isn’t sustainable'' and that the "current rise in inflation expectations is also not sustainable"
  • And even though risks are tilted to the upside for prices right now, and are tilted to the downside for the economy, there is no need to seek an exit from monetary stimulus now given the BOJ’s outlook for prices today

In short, the BOJ is quadrupling down on the wrong assumption that inflation is transitory. It won't be the first catastrophic mistake the BOJ has made.

Moving on, the BOJ's senile governor explained that the central bank's Fixed-Rate Bond operations are meant to stabilizing not jolt markets.

  • "The Bank of Japan’s decision to clarify its bond purchasing plans is designed to prevent speculation", Kuroda said.
  • Kuroda also said that "the clarification on fixed ops doesn’t mean the BOJ wants to buy fewer bonds" which is good beause soon the BOJ will be flooded with sellers.
  • Finally, the central bank chief, said - or rather hoped - that fixed-rate ops aren’t causing excessive market moves

The outcome of this shocking announcement which basically cemented the BOJ's commitment to low rates at the expense of a plunging currency, was immediate and brutal: the Japanese currency immediately tumbled, sliding below 130 vs the USD...

... and sending the USDJPY to the highest level since 2002!

Not even vigorous if futile attempts by the Ministry of Finance to talk the yen up had any success. Moments after the BOJ broke 131 vs the USD, a Japanese finance ministry official says recent forex moves warrant extreme concern, adding that it was important that currencies move stably in line with fundamentals.

The USDJPY briefly dipped 75 pips and resumed its blow out.

Putting the move in context, since the Fed started raising rates on March 16, the yen has fallen from 118 to 131 versus the dollar, hitting a 20-year low earlier today, as investors moved out of yen and into dollars for better investment yields. Kuroda has argued that a weaker yen is "a net positive" for the economy, even as the public becomes increasingly frustrated with BOJ policy, according to Nikkei Asia.

"The latest policy statement has left me with an impression that Kuroda has even hardened his stance," said Hideo Kumano, chief economist at Dai-ichi Life Research Institute. He sure has, and as we said recently, the BOJ has found itself caught between a rock and a hard place. If it sticks to the loose monetary policy, it will exacerbate import-driven inflation. If it raises rates, it could hurt Japan's sluggish recovery from COVID.

Commenting on the BOJ announcement, Noriatsu Tanji, chief bond strategist at Mizuho Securities in Tokyo said that the BOJ's announcement to buy bonds with no limit was a surprise: "To make the announcement of buying unlimited bonds at a fixed rate in the policy statement, the BOJ is sending a very strong message that it is firmly committed to continuing the super-easy policy." He added that “as days go by, players will cease to sell to the BOJ and will stop challenging the 0.25% level, driving down 10 year yields” and said that “this commitment should also help ease upward pressure on super-long yields” which are outside the BOJ’s YCC.

He' may be right, but he didn't say anything about what happens next to the crashing yen. And it is here that the move to 150 is now certain.

And while the collapse in the yen was viewed aken favorably by Japanese stocks, with the Topix spiking over 2% following the announcement, the Japanese decision to let the yen plunge was immiedately noted by its far bigger and more important neighbor China, whose offshore yuan also tumbled yen 0.8% lower, sending the USDCNH above 6.65, the highest level since November 2020...

... as suddenly the "The Biggest Story No-One Is Talking About" is what everyone is talking about - namely how long before the unprecedented easing divergence in Japan and China vs the tightening in the US and the west, leads to a historic crash.

As a reminder, in a note published late last week (available to all professional subscribers), SocGen' Albert Edwards looked at the moves in the yen and yuan, and wrote that "surely all of us working in finance realize by now that something is likely to snap in the financial system and probably quite soon."

Why? Because according to the SocGen strategist, "the rapidity of current market moves and the polarisation of the now extreme Fed (hawkish) and BoJ (dovish) policies almost guarantees that outcome.... Maybe the outcome wouldnt be so ugly if central bankers had not spent recent decades ramping up asset prices to todays grotesque levels through their monetary incontinence. But they did."

Comparing the monetary policy divergence between the US and Japan to "a car crash in slow motion", Edwards writes that polarization in central bank monetary policy between the US Federal Reserve and Bank of Japan is being stretched ever wider to the point where "at some point soon your life might even flash before you ."

If he is right, today's BOJ decision may have just planted the seeds for the next monetary collapse. If so, keep a close eye on gold and cryptos, both of which will likely be trading far, far higher by the time the market realizes what just happened.

A Mostly Wind- & Solar-Powered US Economy Is A Dangerous Fantasy

 Yes it is! as I have argued for years.

"No sane, let alone competent, government would ever be headed down this path."

Of course not! But when you hear Kamala Harris giggling, or Biden babbling it is rather hard to argue that the US has a sane or competent government!

And forget about the German energy "Talibans". We will have a revolution in Europe long before we have "clean" energy! We simply cannot afford it!

Authored by Francis Menton via The Gatestone Institute,

  • When President Biden and other advocates of wind and solar generation speak, they appear to believe that the challenge posed is just a matter of currently having too much fossil fuel generation and not enough wind and solar; and therefore, accomplishing the transition to "net zero" will be a simple matter of building sufficient wind and solar facilities and having those facilities replace the current ones that use the fossil fuels.

  • They are completely wrong about that.

  • The proposed transition to "net zero" via wind and solar power is not only not easy, but is a total fantasy. It likely cannot occur at all without dramatically undermining our economy, lifestyle and security, and it certainly cannot occur at anything remotely approaching reasonable cost. At some point, the ongoing forced transition... will crash and burn.

  • [I]t doesn't matter whether you build a million wind turbines and solar panels, or a billion, or a trillion. On a calm night, they will still produce nothing, and will require full back-up from some other source.

  • If you propose a predominantly wind/solar electricity system, where fossil fuel back-up is banned, you must, repeat must, address the question of energy storage. Without fossil fuel back-up, and with nuclear and hydro constrained, storage is the only remaining option. How much will be needed? How much will it cost? How long will the energy need to remain in storage before it is used?

  • There should be highly-detailed engineering studies of how the transition can be accomplished.... But the opposite is the case. At the current time, the government is paying little to no significant attention to the energy storage problem. There is no detailed engineering plan of how to accomplish the transition. There are no detailed government-supported studies of how much storage will be needed, or of what technology can accomplish the job, or of cost.

  • It gets worse:.... Ken Gregory calculated the cost of such a system as well over $100 trillion, before even getting to the question of whether battery technology exists that can store such amounts of energy for months on end and then discharge the energy over additional months. And even at that enormous cost, that calculation only applied to current levels of electricity consumption.... For purposes of comparison, the entire U.S. GDP is currently around $22 trillion per year.

  • In other words: we have a hundred-trillion-or-so dollar effort that under presidential directive must be fully up and running by 2035, with everybody's light and heat and everything else dependent on success, and not only don't we have any feasibility study or demonstration project, but we haven't started the basic research yet, and the building where the basic research is to be conducted won't be ready until 2025.

  • Meanwhile the country heads down a government-directed and coerced path of massively building wind turbines and solar panels, while forcing the closure of fully-functioning power plants burning coal, oil and natural gas. It is only a question of time before somewhere the system ceases to work.... [I]t is easy to see how the consequences could be dire. Will millions be left without heat in the dead of winter, in which case many will likely die? Will a fully-electrified transportation system get knocked out, stranding millions without ability to get to work? Will our military capabilities get disabled and enable some sort of attack?

  • No sane, let alone competent, government would ever be headed down this path.

The Biden Administration's proposed transition to "net zero" via wind and solar power is not only not easy, but is a total fantasy. It likely cannot occur at all without dramatically undermining our economy, lifestyle and security, and it certainly cannot occur at anything remotely approaching reasonable cost. At some point, the ongoing forced transition will crash and burn.

(Photo by VCG via Getty Images)

With or without Congressional support, President Joe Biden has determined to move the U.S. as quickly as possible toward an economy predominantly powered by wind- and solar-sourced electricity. In his earliest days in office, Biden issued multiple Executive Orders directing the federal bureaucracy to bend all efforts to achieve this goal. One of those early Executive Orders, dated January 27, 2021 and titled "Tackling the Climate Crisis At Home and Abroad," stated:

"It is the policy of my Administration to organize and deploy the full capacity of its agencies to combat the climate crisis to implement a Government-wide approach that reduces climate pollution in every sector of the economy..."

When burned to generate energy, fossil fuels -- coal, oil and natural gas -- all emit carbon dioxide, otherwise known in Biden-speak as "climate pollution." Thus, under Biden's directive, they are all to be suppressed. The alternative of expanding nuclear power has meanwhile equally been made impractical by regulatory obstruction; and our potential hydro-electric capacity is already mostly in use. That leaves as the principal remaining option the generation of more electricity from wind and solar facilities; and indeed, the wind/solar electricity option is currently the subject of great regulatory favor, including extensive government subsidies and tax benefits.

On last year's Earth Day, April 22, 2021, Biden issued a press release expanding on his Executive Orders and setting specific goals for the elimination of fossil fuels from the U.S. economy. Although Congress has not acted on any such proposals, the Earth Day press release supposedly committed the United States by unilateral executive action to "100 percent carbon pollution-free electricity by 2035," and to a "net zero emissions economy by no later than 2050."

We are thus as a country embarked on a government-ordered crash program to eliminate our fossil fuel electricity generation within a very short 13-year period, and to eliminate all usage of fossil fuels within a not-much-longer 28 years. When Biden and other advocates of wind and solar generation speak, they appear to believe that the challenge posed is just a matter of currently having too much fossil fuel generation and not enough wind and solar; and therefore, accomplishing the transition to "net zero" will be a simple matter of building sufficient wind and solar facilities and having those facilities replace the current ones that use the fossil fuels.

They are completely wrong about that.

The green energy advocates, including our President and his administration, entirely misperceive the challenge at hand. The proposed transition to "net zero" via wind and solar power is not only not easy, but is a total fantasy. It likely cannot occur at all without dramatically undermining our economy, lifestyle and security, and it certainly cannot occur at anything remotely approaching reasonable cost. At some point, the ongoing forced transition, should it continue, will inevitably hit physical and/or financial limits, and will crash and burn. But the circumstances under which the crashing and burning will occur are currently unknown. Thus, worse than being a mere fantasy, the attempt to accomplish a "net zero" transition is a highly dangerous fantasy, putting the lives, health, and security of all Americans at risk as the attempted transition proceeds to its inevitable failure.

The root of the mostly-unrecognized problem is that wind and solar generation facilities produce something fundamentally different from what fossil fuels produce. Fossil fuels produce energy that is reliable and dispatchable, that is, available when wanted and needed. The wind and sun produce energy that is intermittent, that is, available only when weather conditions permit, which often does not correspond to consumer demand.

Here is something that ought to be blindingly obvious, but unfortunately goes largely unmentioned in discussions of the green energy transition: No amount of incremental wind and solar power generation on their own can ever provide a reliable 24/7 electricity grid. Electricity gets produced the moment it is consumed, and therefore a reliable grid must provide electricity to meet consumer demand at all hours. To take just the most obvious example, wind turbines produce nothing when the wind is calm, and solar panels produce nothing at night; and therefore, a combined wind/solar system produces nothing on a calm night. Unfortunately, peak electricity demand often occurs in the evening, shortly after sunset, when the wind is calm or close to it. Without full back-up from some source, an electrical grid powered by the wind and sun will experience, as just this one example, a full blackout on every calm night. And it doesn't matter whether you build a million wind turbines and solar panels, or a billion, or a trillion. On a calm night, they will still produce nothing, and will require full back-up from some other source.

Fossil fuels, and particularly natural gas, are fully capable of providing the back-up needed by a principally wind/solar electricity generation system. But our President now directs that fossil fuel back-up is "carbon pollution" and must be eliminated. The remaining option is storage of the energy from the time when it is produced (e.g., in the case of a wind/solar system, at noon on a windy June day) until the time when it is needed for consumption (e.g., 7 PM on a calm December night).

Which brings us to blindingly obvious statement number two: If you propose a predominantly wind/solar electricity system, where fossil fuel back-up is banned, you must, repeat must, address the question of energy storage. Without fossil fuel back-up, and with nuclear and hydro constrained, storage is the only remaining option. How much will be needed? How much will it cost? How long will the energy need to remain in storage before it is used? And, do storage systems exist that can store the energy for that period of time and return it without significant loss and at the rate required to keep the lights on?

If our government officials were remotely competent, while proposing a green energy transition for the country over a short period of years -- and with hundreds of billions of dollars, if not trillions, being spent on the imminent transition -- these questions should be at the forefront of their attention every day. Long before the U.S. ever got committed to transition to an energy system based mostly on wind and sun, it should quite obviously have been far down the road toward demonstration of the feasibility and cost of the energy storage systems that are capable of enabling the transition.

There should be highly-detailed engineering studies of how the transition can be accomplished. The requirements for amounts of batteries measured in gigawatt hours should be known at a high level of precision. The amounts of materials needed to produce the batteries should be known with an equally high level of precision. The technological capabilities of the batteries should be known with an also equally high level of precision (e.g., What is the optimum chemistry of the batteries to be used in the system? What will be loss of energy between input into the battery and consumption? How much in the way of additional generation facilities must be built to provide for this loss? How long can the batteries hold the charge? If charge added in June needs to be stored until December, do the proposed batteries have that capability? Do the proposed batteries need expensive climate control systems to enable them to hold the charge before it is used? And so on, and so on.)

Indeed, by this time, supposedly only 13 years from when we will have a carbon-free electricity system, there should be existing demonstration projects showing clearly what technology will be used, and that the proposed technology works and can be deployed at grid scale and at reasonable cost.

But the opposite is the case. At the current time, the government is paying little to no significant attention to the energy storage problem. There is no detailed engineering plan of how to accomplish the transition. There are no detailed government-supported studies of how much storage will be needed, or of what technology can accomplish the job, or of cost.

It gets worse: In the absence of any serious government effort to address the engineering challenge of energy storage necessary to back up a predominantly wind/solar electricity system, the task has instead fallen to a small number of volunteer amateurs, mostly retired engineers of one sort or another. Several such people have produced credible calculations indicating that backing up a predominantly intermittent wind/solar electricity system using only battery storage will require storage in the range of approximately 30 days of average usage to avoid significant risk of the batteries running out of charge and the system crashing. The high amounts of storage required are largely a consequence of the seasonality inherent in either wind or solar generation, e.g., solar facilities produce far more electricity in the summer than the winter.

One example of a serious effort to determine how much and what type of energy storage would suffice to back up a fully wind/solar electricity system was produced in 2018 by a man named Roger Andrews, a retired engineer then living in Mexico. Andrews's work appeared on a website called Energy Matters in November 2018. Andrews considered two cases, one for California and the other for Germany, and obtained detailed data of electricity usage and of production by existing wind and solar facilities in those places in order to make his calculations.

Andrews' spreadsheets, and charts appearing in his post, demonstrate that, largely due to seasonality of production from both the sun and wind, it would take approximately 30 days of stored electricity usage to get through an entire year with a wind/solar system. Andrews showed that batteries to hold that amount of charge would cost in excess of a full year's GDP for either California or Germany, although, based on existing technology, batteries even at such enormous cost would not have the capability to hold the charge for sufficient months to fulfill their task. At the end of his post, Andrews concluded: "[B]attery storage is clearly not an option for a low-cost 100% renewable future."

In a more recent example, in January 2022, a man name Ken Gregory -- a retired engineer living in Calgary, Canada -- undertook to produce a spreadsheet calculating storage requirements and costs for backing up a wind/solar electricity system for the case of the entire United States. Gregory's work is accessible at this link. Gregory's spreadsheet is based on detailed (in this case, hourly) data for actual consumption and generation from existing wind and solar facilities, with their wildly fluctuating output.

Gregory's principal result is that full back-up by storage of the U.S. electricity system at current levels of consumption, and assuming all generation comes from wind and solar, would require something in the range of 250,000 gigawatt hours of battery capacity. Some of that energy would need to remain in storage for over six months, and be discharged over the course of months. Since U.S. electricity consumption is currently in the range of 3.7 million GWH per year, the 250,000 GWH storage requirement calculated by Gregory represents about 24 days of average usage, a result in the same range as the result reached by Andrews. Gregory calculated the cost of such a system as well over $100 trillion, before even getting to the question of whether battery technology exists that can store such amounts of energy for months on end and then discharge the energy over additional months. And even at that enormous cost, that calculation only applied to current levels of electricity consumption. The Biden "net zero" plan for 2050 involves the approximate tripling of electricity consumption, which by Gregory's calculations would drive the cost of the necessary storage up to the range of some $400 trillion. For purposes of comparison, the entire U.S. GDP is currently around $22 trillion per year.

Obviously Gregory's calculations could be questioned or modified as to many of his assumptions, and perhaps his calculation of the cost of such a system is too high -- or maybe, too low. The fact remains that if the U.S. government were even slightly competent, it would have its own detailed engineering studies of how to accomplish its coerced energy transition, let alone, at this late date, demonstration projects for small cities or towns establishing the feasibility and cost of what is being proposed. None of that exists. Indeed, none of it is even in the works.

To fully understand the depths of incompetence with which the U.S. government is approaching this energy transition, consider the current effort of the federal Department of Energy called the Energy Storage Grand Challenge. Under this program, the DOE proposes to hand out grants to study the challenges of creating batteries to back up the electricity grid when the grid has gone almost fully wind/solar, and particularly to study the subject of the "long duration" batteries that will clearly be needed to store and then discharge massive amounts of energy over the course of months on end to deal with the issue of seasonality.

According to a piece that appeared in Energy Storage News in September 2021, here is the status of that effort: "The DOE is also helping to get a US $75 million long-duration energy storage research centre built at Pacific Northwest National Laboratory, which is expected to open by or during 2025." In other words: we have a hundred-trillion-or-so dollar effort that under presidential directive must be fully up and running by 2035, with everybody's light and heat and everything else dependent on success, and not only don't we have any feasibility study or demonstration project, but we haven't started the basic research yet, and the building where the basic research is to be conducted won't be ready until 2025.

Meanwhile the country heads down a government-directed and coerced path of massively building wind turbines and solar panels, while forcing the closure of fully-functioning power plants burning coal, oil and natural gas. It is only a question of time before somewhere the system ceases to work. It is impossible to predict exactly when and where that will occur. But it is easy to see how the consequences could be dire. Will millions be left without heat in the dead of winter, in which case many will likely die? Will a fully-electrified transportation system get knocked out, stranding millions without ability to get to work? Will our military capabilities get disabled and enable some sort of attack?

No sane, let alone competent, government would ever be headed down this path.

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