Monthly Archives: June 2019

The Coming Collapse of Communist China

jcollinsJune 26, 2019

JC Collins

A few years following the collapse of the twin towers the world was almost unrecognizable from what it had been at the end of the 20th Century.  After grunge, techno, the explosion of websites, Yahoo, Amazon, Supersize Fries, and Bill Clinton, anything seemed possible. The lackluster years of the late 1990’s ended with the birth of the music sharing platform Napster and an unremarkable Y2K event.  The future strangely seemed both mundane and hopeful. Everything changed with the bombing of the U.S.S. Cole in Yemen’s Aden harbor on October 12, 2000.

At the time, I was in Las Vegas attending the largest mining expo in the world.  News of the Cole bombing quickly spread and my first thought was that it was only the beginning.  There were those of us who understood on some intuitive level that something bigger was about to happen, but we couldn’t understand the full magnitude of what was to come.

On the morning of September 11, 2001, a mining co-worker, who was meant to be flying up to Canada from Dallas, called to inform me he wasn’t going to make it as all flights were grounded.  Planes had crashed into the World Trade Center.  That was how I heard about the largest news event since the fall of the Berlin Wall and the collapse of the Soviet Union.  Most of us either raced home or to the nearest boardroom with a television to watch the unfolding events on CNN.  Like everyone else that morning, we knew in our guts that things would never be the same.

Three months after those events, on December 11, 2001, China became a member of the World Trade Organization (WTO).  The argument was that allowing China to enter the WTO would encourage Beijing to adopt liberal economic and democratic norms.  This of course would never happen.  By 2004 Chinese infrastructure projects were using up so much steel and rubber that the cost of large mining trucks and the massive tires which fit on those trucks had skyrocketed.  It was said that China was building the equivalent of three Chicago’s every 12 months.

Within just a few years after the return of Hong Kong to Chinese rule everything had completely changed.  The World Trade Center was gone, China was a member of the World Trade Organization, America was at war in the Middle East, and the China miracle was being propelled by the expansion of American debt.  That’s how fast the world had been transformed.

The role of China becoming the worlds largest creditor nation as America was becoming the largest debtor nation was not an accident.  It was by design and was needed in order to keep the global system of banking and commerce moving forward.  The Asian Currency Crisis of 1997/1998 signaled that the growing imbalances and existing exchange rate arrangements with the US dollar were beginning to cause massive liquidity constraints.  It became clear that an alternative arrangement would be required, but it would take another decade, and crisis, before the monetary policymakers in Beijing began to understand the financial predicament, they were in.  The development of the New Belt and Road Initiative was a possible solution.

China welcomed the opportunity to expand its own credit markets and modernize the country in a fraction of the time it took Western nations in the last century.  The expansion of their own domestic credit market, and membership in the WTO, allowed China to take on ever more increasing amounts of American sovereign debt.

The basic mechanics revolve around the role of the USD as the primary global reserve asset and China’s acquisition of those dollars through balancing trade accounts, or balance of payments. Those dollars need to be invested into dollar-denominated securities, or Treasury bonds, in order to maintain the exchange rate arrangement between the renminbi and dollar.

The major defect in the global monetary framework is that the dollar supply must continue expanding in order to meet global liquidity demands for a growing global economy. The problem is that the dollar is not a true global currency and is in fact the domestic currency of one nation used in a global capacity.  The expansion of the dollar money supply, or excess dollars, through this trade mechanism, must not be allowed to return to America’s domestic economy or it will cause financial trouble in the form of uncontrolled inflation.

China uses these dollars to both purchase US Treasuries and expand its own domestic currency supply.  Taking on, in turn, the inflation created by the expanding dollar money supply.  Since China’s membership into the WTO its foreign exchange reserve account has exploded with dollar-denominated securities.  These foreign exchange reserves have also increased from 16% of China’s GDP to well over 45% of total GDP.  Total China debt-to-GDP ratio has doubled to 300% in the same timeframe and its total public and private debt now rests around $34 trillion. This is a solid indication that taking on US debt has allowed China to expand its own economy through multiple avenues

Consider that the total U.S. debt is around $22 trillion with a debt-to-GDP ratio of 105.4% as of 2017. It is expected that this number should continue to decrease as overall U.S. GDP continues to grow under the Trump mandate.  Compare that to China’s debt-to-GDP ratio of 300% and who do you think is in the stronger position?

To make this point, on Monday, June 24, 2019, a U.S. judge found three Chinese banks in contempt for refusing to comply with subpoenas in an investigation into North Korean sanctions violations.  The three banks are under threat of now having their U.S. dollar accounts terminated by the Justice Department or Treasury Department. Cutting these Chinese banks off from the U.S. financial system.  All three banks immediately suffered stock price drops. Once again indicating who has the stronger position.

This is just a basic summary of the monetary mechanism which exists between the world’s largest debtor nation and largest creditor nation.  All other monetary and financial metrics, including global imbalances and liquidity shortfalls, are squeezed in-between these to polar positions.  Nothing will change or improve within the global monetary system without a change to this arrangement.

After the financial crisis in 2008 the Chinese started calling for an alternative to the USD as the global reserve currency.  The position from Beijing was that a viable alternative could be evolved from the Special Drawing Right (SDR) of the International Monetary Fund (IMF).  The SDR is a claim on currency and not an actual currency itself and would not provide enough liquidity to meet global demands in a reserve capacity.  The claim is for currency which makes up its value composition, or otherwise called basket of currencies.  Back in 2009 these currencies were the USD, British pound, euro, and Japanese yen.  China was promoting the idea of adding the renminbi to the SDR composition to begin the transformation of the SDR into a true global reserve asset.

Throughout the years I wrote extensively on this topic and covered much of the ground of what a transformed SDR would look like and how SDR denominated “substitution accounts” could be used to exchange excess USD reserves for SDR reserves.  Eventually the renminbi was added to the SDR composition and it appeared that China’s move on the IMF and the SDR could very well be the direction the monetary world moved.

(Note:  There is a lot of confusion about the terminology around the Chinese currency.  Some refer to it as the renminbi or RMB, while others call it the yuan.  It is both.  RMB is the name of the actual currency while yuan is the unit of measurement.  It is the same as the relation between the British Sterling currency and its unit of measurement the pound.  In America the name dollar is used for both.  The RMB has both offshore and onshore currencies which only complicate matters further.  The offshore RMB was meant to protect the Chinese domestic market from foreign speculators as it attempted to internationalize its currency.  This strategy has failed and will now be one of the contributing factors to the collapse if China’s banking industry.)

Another event which happened after the last financial crisis was the birth of Bitcoin (BTC) and cryptocurrency.  Bitcoin flew under the radar for years as it built up a large tech following, and its value grew.  It was, for all practical purposes, the maximalists answer to corrupt banks and the growing world debt problem.

Over the last ten years the cryptocurrency market has expanded as hundreds of new digital assets were born and proposed use cases for those assets spread.  BTC value exploded making millionaires and billionaires in what seemed like overnight.  Newcomers poured into the crypto market hoping for quick gains and wealth.  Eventually somewhere around 70% of Bitcoin mining moved to China in search of low energy costs.  Technically speaking, China controls the majority of the Bitcoin network’s collective hashrate.

China also accounts for a large volume of BTC trading.  This volume increased as Chinese exchanges lured investors with 0% trading fees, which the People’s Bank of China (PBOC) would later regulate against.  This forced some trading volume from the Chinese market and it had a modest impact on capital outflows from China, which was the core objective for Beijing, as some of China’s wealthiest private business interests were moving capital offshore and around the world, in order to avoid the credit bubble which was forming in the mainland.  These interests moved a large percentage of it into real estate markets around the world, like New York, Vancouver, San Francisco, Sydney, and Toronto.

It is important to note that these real estate markets are now bloated, and valuation reversals have already begun. This is also true for mainland China markets as well.  Maybe even more so.  We are starting to see Chinese money being pulled from these “offshore” markets and this money could very well start finding its way into the Bitcoin and crypto markets from both inside and outside China.  Central bank policies and stumbling bond markets would normally provide the alternative to real estate but we are entering a period where the perfect situation is developing for capital to flee real estate, avoid bond markets, and pour directly into the crypto market, with some overflow moving into gold and other precious metals. Stock markets may move marginally higher during this transition, but those markets are in the high range of valuation (and under enhanced risk) while crypto is still in the early phase of adoption and remains in the low range of valuation for the time being. This will change substantially in the next 6 to 12 months as the developing fundamentals of the crypto market take root and expand across investor demographics and industry sectors.

Outside of monetary and financial concerns, China also has deep cultural and political fault lines which will move suddenly and dramatically under the right conditions.  The Communist Party of China (CPC) maintains tight control over these fault lines and uses technological surveillance tools to keep the different cultural fragments aligned with Party policies.  But as the recent million plus protests in Hong Kong showed, the people have means of organizing and planning while remaining invisible to those tools.

More worrisome for Beijing is the divisions within the CPC itself.  There is still a vast number of party members who are past President Jiang Zemin faithful’s and don’t agree with the direction which President Xi Jinping is taking the country. These divisions are magnified when you consider that there is also a fragmentation between the CPC and the People’s Liberation Army (PLA).  There are many crossovers between the CPC and the PLA but when the fault lines begin to move the PLA will take on a much different scope then it currently maintains.

The PLA controls much of that Chinese business interests both inside and outside China.  But it isn’t the only one.  The is also the China Poly Group Corporation which owns hundreds of subsidiaries in such diverse industry sectors as construction, real estate, resource extraction, fishing, military and entertainment firms.  Then there is the China International Trust and Investment Corporation (CITC) which runs in the same sectors.  All support one another but will also compete with one another given the right situation and aligned interests within the CPC itself.

Early in 2019 President Xi Jinping was appointed “President for life” which to the informed analyst is a clear indication of weakness as opposed to strength.  Such a move was meant to stifle any opposition from within China to Xi Jinping’s rule and avoid any fragmentation of the CPC around the cultural or business fault lines.  A strong case can be made that this appointment was the first step towards the collapse of Communist rule in China.

As the recent protests in Hong Kong have shown, Beijing is not as strong as many would have considered.  America under the Trump administration is taking a much more pro-Taiwan approach and is quickly strengthening relations.  China, for all its projections of strength and stability, has never moved to take full control over Taiwan because it knows that such a move would unravel the precarious relationships and fault lines within the mainland’s political and business interests.  These relationships remain to such a level that both Hong Kong and Taiwan are beginning to benefit from the U.S. trade war with China as companies move from the mainland.

The New Silk Road Initiative, or otherwise called the Belt and Road Initiative (BRI) strategy started by China in 2015 is now encountering problems as countries which joined the project and incurred massive amounts of debt to fund the development of ports and other vital infrastructure, are now expressing disappointment with the pace and returns to date.  This debt-trap diplomacy by Beijing to consolidate economic and geopolitical power was once considered to be unshakeable but it is now only a few Chinese bank failures away from taking multiple nations down the road of ruin alongside it.  The debts in these developing nations is unsustainable, and they could just as easily pull China down with them as the opposite.

Once bank failures start to spread across China the cultural, political, and business fault lines will rupture and the Communist Party of China (CPC) will tear itself apart as the vying factions fight one another for power.  Under such a scenario the assets owned by the PLA and others outside of China may very well be frozen or confiscated by governments around the world, like America, in order to create leverage over the PLA and ensure that Chinese weapons systems and nuclear missiles remain protected and secure.  The PLA can also be leveraged to turn its focus and scope inward to ensure that the revolution doesn’t become too violent and that any transition in power would be somewhat orderly and fast.

Much like after the collapse of the Soviet Union, there will be instability in China as new alliances and fault lines are developed.  The full transition to democratic norms and open markets will take some time but the real impact will be felt around the world as those nations which once had strong relationships built with the CPC will find themselves having to re-evaluate their geopolitical strategies.  Russia and Iran will be the two impacted the most.  The BRICS alliance is already all but dead as India is ahead of the game by offering incentives to companies leaving China because of trade tariffs imposed by the Trump administration.

The writing is on the wall across multiple fronts.

It’s June 26, 2019 as I write these words.  Change is happening before our eyes across the geopolitical and monetary worlds.  So much is happening so fast and few analysts and media presenters are putting the pieces together.  The explosive growth of the crypto market is just one prime example of how key indicators are being ignored across vast sectors.  This is where we loop back to the beginning of our own analysis.

Massive global changes almost always center around large monetary changes and shifts in how the wealth of the world is managed and moved.  Our time is no different.  The imbalances in the dollar-based monetary system has found a solution in the form of digital assets and digital ledgers.  Blockchain solution companies like Ripple have been working with government regulators, central banks, and monetary policymakers for years on developing these solutions.  This fact has been grossly missed by most armchair and mainstream analysts.

Decentralized ledger and cross-ledger solutions have been developed which will replace the sovereign USD reserve function with non-sovereign and non-reserve capabilities to move value around the world and balance payments in seconds at fractions of the cost.  Even the IMF itself is working with Ripple and other blockchain companies on these solutions.

China had pushed hard for the SDR to become the dollar alternative but now even the IMF themselves appear to be moving towards a digital ledger solution to replace the traditional reserve role of the dollar and other Western currencies.  This would suggest that China is running out of road and will soon find its banking industry collapsing from within as the USD-polar monetary framework which it depended on for its “miracle” growth is now being replaced with a real and tangible alternative.  The Communist Party of China will not survive this transition but China itself will both survive and thrive in the years after.

Ripple and other blockchain companies are partnering and aligning with banking and business interests in China because of the size of that market.  These interests will re-align with the realities within China as the Communist Party collapses and capital outflows and inflows search for new roads.  Bitcoin itself will be one of these roads and could very well see that cryptocurrency reach astronomical valuations as capital flees a fragmenting China.

Don’t blink because the world is about to change.  – JC

JC Collins can be contacted at jcollins@philosophyofmetrics.com

This article is copyrighted by POM Media©2019. As non-Premium content, it can be shared and reposted without further permission.

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Why Liberals Hate Chick-fil-A

Posted on May 25, 2019 by John Hinderaker in Conservatism, Liberals

We ate lunch at a Chick-fil-A today. When we entered the restaurant, the first thing we saw was an empty table that was set up to honor fallen military personnel over the Memorial Day weekend. There was a red rose, a folded flag, an inverted glass and an open Bible, along with text explaining the elements of the display.

Chick-fil-A is unabashedly pro-American. I suspect that is the real reason for the animus that so many liberals bear against the company. There was a time when liberals were generally patriotic. George McGovern is a good example: he was wrong on just about every issue, but he was a veteran who loved his country. That is no longer true.
Now, while no doubt there are honorable exceptions, liberals are usually anti-American. They have been taught a twisted, Zinnified version of American history, and they have internalized a Chomskyite view of the world in which all evils are traceable to American misdeeds. Liberals tend to be angry, unhappy people, and it is convenient for them to blame their problems on their country’s supposed failings. Organizations like Chick-fil-A that are pro-America, pro-religion (Chick-fil-A restaurants are closed on Sunday), and culturally upbeat are anathema.
One of my daughters lives in Texas. Coincidentally, she ate lunch at a Chick-fil-A today, too. (She loves Chick-fil-A, so it isn’t that much of a coincidence.) She wrote this on our family text chat:

The very high functioning Down syndrome boy who took our order jogged next to the car as we pulled forward, running our card at the same time and then wished us a blessed day. And then a very obviously gay kid handed us our food. Take that haters.

Of course, nothing will shame the haters. But it is good to see that a few outposts of sanity are holding out against the tidal wave of left-wing hate that has engulfed the country.

 

Operation “Grave Digger”: Operation Gladio B, Flynn, Fethullah Gülen, MB

Show Notes: More than a coup attempt on President Trump, How Flynn and Gladio B will dig up the bodies that are nearing the surface now!

All Patriots must listen!!! Abel Danger/Juan O Savin

Our “Second Independence Day” is coming up, pay attention.

This New York Man Got Arrested After Defending His Own Home

Photo
Amy Swearer

Amy Swearer is a senior legal policy analyst at the Meese Center for Legal and Judicial Studies at The Heritage Foundation.
@AmySwearer

All too often, advocates of strict gun control promise that more complex and convoluted laws will save lives without imposing a serious burden on the right of law-abiding citizens to exercise their constitutional rights.
Their argument simply doesn’t hold up. Their gun control laws fail not only to address how actual criminals get their firearms, but they also impose a real burden on ordinary citizens’ Second Amendment rights. They even risk making felons out of otherwise law-abiding citizens.
If that sounds like an exaggeration, just look to the case of Ronald Stolarczyk of Oneida County, New York. He’s now facing felony charges for lawfully protecting himself against criminals without first getting the county’s permission to possess a handgun in his home—something that would cost him hundreds of dollars and months of paperwork.

The 64-year-old Stolarczyk was “minding his own business in his kitchen” one day when he heard voices coming from his garage. Stolarczyk tried simply waiting for the intruders to leave, but the two assailants soon ascended the stairs and attempted to enter his central living space.
Stolarczyk then yelled at the burglars to leave, hoping that knowledge of his presence would scare them away. The burglars were undeterred by his warning, and one even aggressively advanced toward him.
Stolarczyk now feared for his life, both because his home had previously been broken into and because he was aware of recent home invasions that resulted in the death of the homeowner.
Stolarczyk quickly retrieved his deceased father’s .38-caliber Rossi revolver and fired several rounds at the burglars, both of whom were killed.After making sure he was safe from all threats, Stolarczyk immediately called the police and walked to the far end of his driveway to wait for their arrival.
Once they arrived, the responding officers investigated the incident and the Oneida County district attorney concluded that the shooting was likely justified, and that Stolarczyk would not face homicide charges.
The district attorney, however, charged Stolarczyk with felony criminal possession of a firearm.
The gun Stolarczyk used had been legally owned by his father, who had properly registered the revolver and lived with it in the same house where the shooting took place.
Stolarczyk came into possession of it after his father died and left him the gun, and nothing legally prohibited him from possessing firearms.
The problem was that he failed to obtain his own handgun permit and register the gun in his name. The problem was that he failed to obtain his own handgun permit and register the gun in his name.
Thus, under state law, this otherwise law-abiding citizen was “guilty” of a Class E felony punishable by up to four years in state prison and the permanent loss of his Second Amendment rights.
Additionally, the local government seized possession of Stolarczyk’s house, claiming it was in violation of local housing codes, purportedly because he could not afford running water or electricity and kept the house full of old electronics.
All of this happened because Stolarczyk—who couldn’t even afford a standard cellphone plan—failed to properly jump through all the hoops necessary to gain the government’s permission to possess a firearm in his home for self-defense.Just How Bad Is the Local System?
On the one hand, this case is a clear example of prosecutorial discretion run amok. Most people would agree that Stolarczyk, an otherwise law-abiding citizen, should not be criminally punished after calling the police on himself to report the justified use of lethal force against burglars.
On the other hand, these charges expose a deeper problem stemming from the severe burden that Oneida County places on residents’ Second Amendment rights.
To fully appreciate how inappropriate these charges are, we decided to find out exactly what it takes to obtain a pistol permit in Oneida County—again, the only thing Stolarczyk allegedly failed to do properly here.
It turns out that, after a lengthy investigation, we’re still not certain we fully understand the process. Our best educated guess is something like the following:
First, anyone interested in owning a handgun must pick up the application in person, which can only be done at the Oneida County Office Building. But prepare to take time off work, because this building is only open Monday through Friday from 8:30 a.m. to 12 p.m., and 1 p.m. to 3:30 p.m.

Alternatively, if you live on the opposite side of the county and want to avoid a 50-minute drive to Utica, you can try the Griffiss Business and Technology Park office, open on Thursdays between 8 a.m. and 12 p.m.
Once at the Office of Pistol Licensing, you’ll need to present a New York state driver’s license proving that you’re at least 21 years old and have lived in Oneida County for at least one year.
You also must provide a certificate of completion for an NRA Basic Pistol Course, which lasts approximately eight hours and must be led by a county-approved instructor.
After calling many of the recommended instructors, we learned that the introductory course can cost anywhere between $40 and $165 and that classes aren’t necessarily offered on a regular basis.
Further, had we not called these instructors and the licensing office itself for clarification, it would have been nearly impossible to determine which courses Oneida County does and does not accept to meet the requirement.
Finally, after paying a $10 processing fee to the county, you can receive the application form and begin the process of seeking the county’s permission to own a gun in your own home.
The application itself consists of five parts, which must be completed in black ink, and all signatures on the form must be notarized. Two identical head shot photographs no larger than 2 x 2 inches must be attached to the application.
Each application also requires four notarized character references from individuals 21 years of age or older, who are not related to the applicant, and who reside in Oneida County.

After completing the application, you will be responsible for paying several additional fees for processing and fingerprinting. These include $150 to the Oneida County Sheriff’s Office, $100 to the Utica Police Department, or $50 to the Rome Police Department, depending on the jurisdiction in which you reside.
All payments must be made through a postal money order, which requires a trip to the post office—and possibly additional research if, like many people, you have no idea what a postal money order is or where to get one.
There will then be a six-month waiting period for processing, after which you’ll be informed whether your application was accepted or denied. Denials can occur for a myriad of reasons, including seemingly arbitrary determinations by the application processor that you are not “of good moral character.”
An Onerous Burden
This is the complex and costly system that Stolarczyk—who couldn’t afford to keep his lights on—needed to navigate in order to legally own the revolver that may have saved his life.
That’s not to say the government can never impose any requirements on gun owners, or regulate the manner in which firearms are purchased or carried outside the home. The Second Amendment right, like all other enumerated rights, is not unlimited.
But examples like this make clear that laborious and costly gun licensing requirements impose substantial and undue burdens on the exercise of the right to keep and bear arms—burdens we would never allow to be imposed on another fundamental constitutional right.
Worse still, these burdens fall heaviest on the shoulders of those who, unlike many of the wealthy politicians calling for gun control, can’t afford to live in gated communities and will never receive a police escort.
No level of government—be it federal, state, or local—should get away with imposing such great barriers to exercising a constitutional right.
It certainly shouldn’t punish individuals whose only crime was failing to properly navigate a nightmarishly complex and expensive web of bureaucracy prior to defending their life, liberty, and property with a handgun.

ANDY’S NOTE: I find it hard to believe that the “local politicians are Americans”, therefore I do not believe they are/were.

Source: https://www.dailysignal.com/2019/06/20/this-new-york-man-got-arrested-after-defending-his-own-home/?utm_source=rss&utm_medium=rss&utm_campaign=this-new-york-man-got-arrested-after-defending-his-own-home?utm_source=TDS_Email&utm_medium=email&utm_campaign=MorningBell&mkt_tok=eyJpIjoiTTJZNU16STBZVEl4WWpFMSIsInQiOiI4Q3p1QjJwaXlNN3I3YjE2QnQyTm1oSmJlcnRyb1NUdmxEamwwbUJMWUtxMWI4MHVMYkVJWHgyU1VrQzNSenVLcHg3M1U5MzhrNkFBZ3hTaXBKRmRCbjdLNjZLZXh0b1QxSzdGbWRLNlFJcEVwOUpJdlwvYmpsOVczXC8zSnd2SGpWIn0%3D

 

 

President Trump Take The Key From Bill Binney & Kirk Wiebe To End The Coup

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