Full-Blown Currency War Can No Longer Be Ruled Out, Pimco Says 

Source: Yahoo Finance/Bloomberg

“A full-blown currency war where major central banks and governments, including the U.S., deliberately weaken their currencies can no longer be ruled out, Pacific Investment Management Co.’s global economic adviser Joachim Fels wrote in a report. The view is in line with a rising chorus of Wall Street analysts who warn that President Donald Trump’s repeated complaints about the foreign exchange practices of key trading partners heightens the risk of U.S. intervention to weaken the dollar. Fels describes current conditions as a ‘cold currency war, round three’ that is at risk of escalating. ‘Following a pause since early 2018, the cold currency war that has been waging between the world’s major trading blocs for more than five years has been flaring up again,’ Fels wrote….’Even the threat of outright dollar sales, coupled with continued verbal and tweeted ‘weak dollar policy’ interventions and, importantly, easier monetary policy by the Fed, could well do the trick,’ according to Fels.”

 

 

NY Fed’s “Recession Probability Index” Is Now At “Alarming Levels” 

Source: Zero Hedge

“In addition to being the longest economic expansion in United States history, a number of reliable recession warning indicators have been flashing red in 2019. The latest of these is the New York Federal Reserve’s recession probability index…’In the past, every time since 1960 that this index has breached 30%, a recession followed,’ Morgan Stanley Wealth Management CIO Lisa Shalett wrote in a July 1 note to clients. It rose to 32.9% in June. Shalett also pointed to the gold/silver ratio, weakness in auto sales, housing, manufacturing, earnings, and capital spending. ‘Recession probability models have entered warning territory and it may be unavoidable,’ she added according to Axios. The most worrying part of a recession is that not only have most Americans not recovered from the last one, but many are blissfully unaware that an economic downturn is right around the corner. As the mainstream media lambasts the American public with tales of an epic and monumental economy, the data points and actual facts continue to rise to the surface….Around 28% of adults in the U.S. have no emergency savings, according to Bankrate’s latest Financial Security Index…That would mean that a job loss or one missed paycheck would put almost a third of Americans in financial hardship.”

 

Congress Is Coming for Your IRA 

Source: Wall Street Journal

“Like grave robbers opening King Tut’s tomb, Congress can’t wait to get its hands on America’s retirement-account assets. The House passed the Setting Every Community Up for Retirement Enhancement Act, known by the acronym Secure, in May. The vote was 417-3. The Secure Act is widely expected to pass the Senate by unanimous consent. While ostensibly helping Americans save for retirement, the bill would actually reduce the value of all retirement savings plans: individual retirement accounts, 401(k)s, Roth IRAs, the works. The main problem with the Secure Act is that it eliminates the stretch IRA, the fixed star in the financial-planning firmament since 1999. The stretch IRA lets savers leave their retirement accounts to children, grandchildren or other beneficiaries…Congress wants to kill this. The Secure Act gives nonspouse beneficiaries 10 years to pull out all the money in an IRA. The effect would be to make more of an IRA subject to higher taxes sooner, as distributions are made in supersize chunks. As much as one-third more of an inherited IRA would get gobbled up by taxes than under current rules. When the Tax Cuts and Jobs Act expires in 2025, taxes will rise across the board. If President Trump signs the Secure Act into law, the stage will be set for a taxpocalypse sometime in the next decade….The insurance industry loves the Secure Act’s mandate that annuities be offered as a payout option in all retirement plans. Insurance companies sold more than $230 billion worth of annuities in 2018, and they would like to push that figure higher. The mandatory offer of an annuity is a first step that could lead to the mandatory annuitization of all retirement accounts. This would shoehorn the distributions into higher brackets, accelerate the collection of tax revenue, and eliminate the ‘problem’ of the inherited IRA. Best of all, politicians would get to accomplish all this without voting to raise taxes.”

 

Recession fears rise for middle-class families 

Source: CNBC

“Middle-class Americans are less optimistic about their economic prospects than they were just six months ago, according to a new report from CUNA Mutual Group…They graded their chances of achieving the American dream as a ‘C,’ down from a ‘B-minus’ in the fall, the insurance provider found. Close to half were increasingly concerned about an upcoming recession. A separate report by Allianz Life found that 48% said they fear a major recession, up from 46% in the first quarter of 2019 and 44% one year ago. ‘Americans keep hearing that this is the longest economic expansion in history,’ said Steven Rick, CUNA Mutual’s chief economist. ‘People’s expectations are that we are due’ for a recession….’This should be a wake-up call to families to start shoring up their finances now, whether that takes the form of cutting spending, reassessing their savings to avoid having to cut into their retirement to stay afloat or even refinancing a mortgage if that’ll put them in a better position,’ Rick said.”

 

 

 

The Fed Could Use a Golden Rule 

Source: Grant/Wall Street Journal

“Though money can’t talk, people can’t stop talking about it. With the nomination of Judy Shelton to the Federal Reserve Board, the discussion has tilted to gold. Gold is money, or a legacy form of money, Ms. Shelton contends, and the gold standard is a reputable, even superior, form of monetary organization. The economists can hardly believe their ears. The central bankers roll their eyes. How can this obviously intelligent woman be so ignorant? Let us see about that. America was on one metallic standard or another from the Founding until President Richard Nixon announced the suspension of the Treasury’s standing offer to foreign governments to exchange dollars for gold, or vice versa, at the unvarying rate of $35 an ounce. The date was Aug. 15, 1971. Ever since, the dollar has been undefined in law….The advance of computer technology has made possible a world-wide monetary system based on the scientifically informed discretion of Ph.D. economists. The Fed alone employs 700 of them….Gold-standard central banking concerned itself with the present. Millennial central bankers dare to take a view of the future. The moderns forecast, or attempt to forecast, economic growth, inflation, employment….The ideology of the gold standard was laissez-faire; that of the Ph.D. standard (let’s call it) is statism. Gold-standard central bankers bought few, if any, government securities. Today’s central bankers stuff their balance sheets with them….In today’s monetary regime, some $13 trillion of debt securities world-wide are priced to deliver a yield of less than zero. There’s been nothing like it in 4,000 years of recorded interest-rate history. And if gold could once be brushed aside as an anachronistic form of money, that time is no more, with private companies competing to bring digital gold to the blockchain. In 1989, Ms. Shelton published ‘The Coming Soviet Crash,’ a brilliant and courageous analysis of the weakness of an overrated collectivist economy. She could be just the woman to remind the Fed’s doctors of economics how monetary capitalism works.”

 

Swedish people are getting chip implants to replace cash 

Source: New York Post

“Thousands of people in Sweden are having futuristic microchips implanted into their skin to carry out everyday activities and replace credit cards and cash. More than 4,000 people have already had the sci-fi-ish chips, about the size of a grain of rice, inserted into their hands – with the pioneers predicting millions will soon join them as they hope to take it global….They have particularly caught on, however, by enabling owners to pay in stores with a simple swipe of the hand, a big deal in a forward-looking country that is moving toward eliminating cash. The microchips were pioneered by former body piercer Jowan Osterlund, who calls the technology a ‘moonshot’ – and who told Fortune magazine that he’s been hit up by hopeful investors ‘on every continent except Antarctica.’…Osterlund insists the technology is safe – but that has not stopped alarm bells from ringing, with some fearing a link to a doubling in cybercrime in the country over the last decade….’People have shown they’re happy to give up privacy for convenience,’ he said. ‘The chip is very convenient, so could we accept our data being shared very widely before we know the risks?’ The trend coincides with Sweden’s march toward going cashless, with notes and coins making up just 1 percent of Sweden’s economy.”

 

 

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