Thursday, 11 August 2016

Fiat Money. Unsound At Any Price.

Baltic Dry Index. 638 +07     Brent Crude 43.86

LIR Gold Target in 2019: $30,000.  Revised due to QE programs.

“If we went back on the gold standard and we adhered to the actual structure of the gold standard as it existed prior to 1913, we’d be fine. Remember that the period 1870 to 1913 was one of the most aggressive periods economically that we’ve had in the United States, and that was a golden period of the gold standard. I’m known as a gold bug and everyone laughs at me, but why do central banks own gold now?” 

Alan Greenspan. June 28, 2016.

Today we open with sagging Asia where an oil price slump is leading markets lower, and everyone is cautiously awaiting tomorrow’s China Friday data release. As usual with top down China, everyone expects China to hit the target figures, but as usual with China, very few will believe the official figures. As with Uncle Scam’s Bureau of Labor Statistics, it all depends on what is, is.

In a time of universal deceit, telling the truth is a revolutionary act.

George Orwell.

Asian markets dip as oil prices slump

Published: Aug 10, 2016 11:16 p.m. ET

Bank of Korea keeps interest rates unchanged

Shares in Asia were broadly down early Thursday, as a rise in crude oil inventory and expanding production in Saudi Arabia sent oil prices lower.

Australia’s S&P/ASX 200 XJO, -0.65%   was trading down 1.0%, while Singapore’s Straits Times Index fell 0.6% STI, -0.38%   and Korea’s Kospi SEU, -0.22%   lost 0.3%. Japan’s cash market was shut for a holiday Thursday.

Overnight, U.S. crude oil prices fell 2.5% to $41.71 a barrel, after the Energy Information Administration said inventories of crude rose, contrary to expectations of a decline. Crude oil was trading down a further 1% in early Asian trade Thursday.

Separately, Saudi Arabia, the world’s largest oil producer, expanded production to maintain market share. The move “suggests a pragmatic effort to maintain export revenues to pay the bills and a determination to maintain market share,” said Tim Evans, a Citi Futures analyst.

Among commodities-linked stocks in Australia, Rio Tinto Ltd. RIO, -1.84%   was last down 0.8% at A$49.57, while Fortescue Metals Group FMG, -1.20%   lost 1.1% at A$4.53.

The oil development overshadowed another rate cut in the region, with markets building up expectations faster than central banks can deliver.

New Zealand’s central bank on Thursday cut the official interest rate by a quarter of a percentage point to a record low of 2.00%, indicating further reductions are likely to push consumer price inflation higher and tame a strong New Zealand dollar.

China Data Blast Offers New Clues on Economy's Direction

August 10, 2016 — 10:00 PM BST
China will release a raft of data in coming days gauging activity across crucial areas of the economy, from stores and factories to lending and investment, offering the newest clues as to whether recent stabilization has continued into the second half of the year.

Factory output, retail sales and fixed-asset investment all held mainly steady in July, according to economists surveyed by Bloomberg before reports due Friday at 10 a.m. in Beijing. China’s credit expansion probably slowed after posting surprisingly strong June growth, according to forecasters before that report, which is typically released mid-month.

Fresh signs of stability would follow other reports this week that showed factory deflation moderated and consumer inflation held up in July while foreign-exchange reserves were little changed and exports remained sluggish. The world’s second-largest economy defied naysayers in the first half of 2016 with two quarters of 6.7 percent growth, though the performance raises questions about the sustainability of the debt-fueled expansion.

Retail sales, a key component to helping second-quarter growth avoid falling to a fresh post-2009 low, climbed 10.5 percent from a year earlier, forecasts showed as of late Wednesday. That’s nearly in line with 10.6 percent in June.

Industrial production probably posted a second-straight 6.2 percent year-on-year increase, projections show, after weaker readings in May and April. After those soggy export numbers, any such factory weakness wouldn’t be a good sign for global demand.

We close for the day with a reminder of the past. How we all got to end up on the Great Nixonian Error of fiat money, communist money, and bubble and bust crony central bankster casino capitalism, and gargantuan unrepayable debt. Instead of simply devaluing the dollar against gold, we all ended up on fiat money, communist money, stealing the future from our children and future generations, despoiling the planet for the enrichment of banksters and  the one percent.

Why did I take up stealing? To live better, to own things I couldn't afford, to acquire this good taste which you now enjoy and which I should be very reluctant to give up.

President Nixon 1971, with apologies to Cary Grant, To Catch A Thief, 1955.

Opinion: Adopt a gold-backed dollar? This is what happened the last time we tried

Published: Aug 10, 2016 12:53 p.m. ET

Bretton Woods system and its gold standard fell apart 45 years ago this month

The dollar and gold are synonymous,” Harry Dexter White, the architect of the Bretton Woods international monetary system, told Congress in 1945. “There is no likelihood that . . . the United States will, at any time, be faced with the difficulty of buying and selling gold at a fixed price freely.”

Under the Bretton Woods system, currencies were tied to the U.S. dollar at a fixed rate, and the dollar was in turn tied to gold GCZ6, -0.29%   at $35 an ounce. Today there is much nostalgia about Bretton Woods — a belief that the quarter-century from 1946 to Aug. 15, 1971 (when the system collapsed) was a golden era of monetary stability. But the reality was very different.

Although the International Monetary Fund was inaugurated in 1946, the first nine European countries to meet the requirements of its Article VIII — that their currencies be freely convertible into dollars at a fixed rate — didn’t do so until 1961. And by then, the system was already coming under enormous strain, as the U.S. — contrary to White’s assurances — was losing gold reserves.

The fundamental problem was that the United States couldn't simultaneously keep the world adequately supplied with dollars and sustain the large gold reserves required by its gold-convertibility commitment. The logic was laid bare by economist Robert Triffin in his now-famous 1960 congressional testimony. There were, he explained, “absurdities associated with the use of national currencies as international reserves.” It constituted a “‘built-in destabilizer’ in the world monetary system.” The European dollar-convertibility pledges, far from representing the final critical step into a new monetary era, “merely return[ed] the world to the unorganized and nationalistic gold exchange standard of the late 1920s.”

When the world accumulated dollars as reserves, rather than gold, it put the United States in an impossible position. Foreigners lent the excess dollars back to the U.S. This increased U.S. short-term liabilities, which implied the U.S. should boost its gold reserves to maintain its convertibility pledge. But here’s the rub: if it did so, the global dollar “shortage” persisted; if it didn’t, the U.S. ultimately wound up hopelessly trying to guarantee more and more dollars with less and less gold. This became known as “the Triffin dilemma.”

If concerted international action wasn’t taken to change the system, Triffin explained, a deadly dynamic would set in. The United States would need to deflate, devalue, or impose trade and exchange restrictions to prevent the loss of all its gold reserves. This could cause a global financial panic and trigger protectionist measures around the world.

What could prevent this? President John F. Kennedy, who took office soon after Triffin’s testimony, wouldn’t countenance a dollar devaluation; austerity, likewise, wasn’t in the cards. Instead, the U.S. resorted to plugging the dikes with taxes, regulations, gold-market interventions, central-bank swap arrangements, and moral suasion directed at banks and foreign governments — just as Triffin had anticipated.

Under Richard Nixon, inflation climbed rapidly, reaching nearly 6% in 1970, and world dollar reserves rose sharply. In tandem, American monetary gold stocks tumbled to a mere 22% of dollars held by foreign central banks, down from 50% a few years prior.

By May 1971, Germany could no longer hold its currency peg. The deutsche mark was being driven up by relentless capital inflows as the world dumped dollars. After a bruising internal debate, the German government floated the mark on May 10. While this succeeded in curbing speculative flows into Germany, it did not halt the flow out of the U.S.

Nixon’s Treasury secretary, John Connally, angrily rejected suggestions from IMF Managing Director Pierre-Paul Schweitzer that the U.S. raise interest rates or devalue the dollar. Instead he blamed Japan, the newest destination for speculative capital in the wake of the mark’s float, for its “controlled economy.”
Dollar dumping accelerated. France sent a battleship to take home French gold from the New York Fed’s vaults.
Every generation imagines itself to be more intelligent than the one that went before it, and wiser than the one that comes after it.

George Orwell.
At the Comex silver depositories Wednesday final figures were: Registered 27.48 Moz, Eligible 125.39 Moz, Total 152.87 Moz. 

Crooks and Scoundrels Corner

The bent, the seriously bent, and the totally doubled over.
Tesla, the dream v reality.

Tesla Is Playing Catch-Up With China’s BYD in Nearly Every Business Category

By the time Fremont’s flamboyant physicist declared his intent to create a vertically integrated clean energy company, China’s quiet chemist had already built one.

by Matthew Klippenstein August 09, 2016
Elon Musk’s Master Plan, Part Deux envisioned a future where Teslas are used for each type of terrestrial transport, from passenger vehicles to buses and trucks, supplemented by a seamless suite of solar-and-storage products.

This vision was probably best captured in Tesla’s announcement of its offer to acquire SolarCity: We would be the world’s only vertically integrated energy company offering end-to-end clean energy products to our customers.”

In fact, Tesla would be the second such company. China’s BYD (short for “Build Your Dreams”) has already built Elon’s dream -- and has done so profitably.

Tesla already enjoys advantages of scale over its rivals. It expects EV sales to rise from 50,000 last year to 80,000 this year, for a 60 percent annual growth rate. At 100 kilowatt-hours per vehicle -- a slight overestimate -- Tesla will have consumed 5 gigawatt-hours of batteries in 2015 and 8 gigawatt-hours in 2016. These volumes dwarf those of its well-known competition.

Though Tesla did not break out its energy storage sales in Q2, it deployed 25 megawatt-hours across four continents in Q1.

As for solar panels, SolarCity expects its Gigafactory to continue installing equipment through Q3 2017. If commissioning proceeds smoothly, it could clear 1 gigawatt of production in 2018.

Tesla likely won’t commercialize its bus or long-haul trucks before 2020, as it will want to focus on the Model 3 and Model Y. Cars are a far larger market than buses and transport trucks, so it would be ludicrous to go for the latter first.

It’s hard to put a timeline on Tesla’s autonomy efforts, given Mobileye’s termination of the two companies’ relationship, but at least the company can spread the effort across its approximately 15,000 employees. SolarCity would also bring a further 13,000 employees into the fold.

----When comparing the two companies head to head, the data shows that in almost every relevant dimension, BYD has gone further and is growing faster.

Passenger vehicle EVs: BYD not only outsold Tesla last year, but its planned growth this year is higher. (It’s on track to meet those projections, too, with BYD China having sold 47,000 electric passenger cars through Q2.)

The Model 3 could help Tesla catch up to BYD in 2018/2019 if it executes to plan. Unfortunately, doubts linger about Tesla’s ability to do so, given its struggles with even modest levels of mass production. BYD already offers 10 automotive models, so ramping up future EV programs should entail relatively low levels of risk.

Battery use: BYD produced 10 gigawatt-hours of lithium-iron phosphate (LFP) batteries last year in its 10-gigawatt-hour factory, and it is now building a second manufacturing facility. It expects to produce 16 gigawatt-hours in 2016, keeping pace with Tesla’s growth rate.

Despite Tesla having half the battery scale as compared to BYD, it probably has a lower cost per kilowatt-hour, because iron phosphate has perhaps two-thirds the energy density of Tesla’s NCA (lithium nickel cobalt aluminum oxide) battery chemistry. And though BYD has improved its batteries’ energy density 30 percent in the past few years (likely by adding manganese), other chemistries have advanced as well.

LFP does have substantial advantages, the biggest being its dimensional stability when charged or discharged, heated or cooled. This allows BYD to recharge its buses at 300 kilowatts without a battery cooling system. (It also relegates Tesla’s superchargers to being the world’s second-fastest charging stations.)

The advantages carry over to durability; BYD buses come with a 12-year battery warranty, and many of the earliest generations of BYD e6 taxis -- still in use -- have surpassed 500,000 miles per unit on their original battery packs.

“…under the gold standard, a free banking system stands as the protector of an economy's stability and balanced growth... The abandonment of the gold standard made it possible for the welfare statists to use the banking system as a means to an unlimited expansion of credit... In the absence of the gold standard, there is no way to protect savings from confiscation through inflation”

Alan Greenspan

Solar  & Related Update.

With events happening fast in the development of solar power and graphene, I’ve added this section. Updates as they get reported. Is converting sunlight to usable cheap AC or DC energy mankind’s future from the 21st century onwards? DC? A quantum computer next?

Liquid light switch bridges the gap between light and electricity

Colin Jeffrey August 9, 2016
Scientists working at the University of Cambridge have used a form of liquid light to create a semiconductor switch that is so small that it not only blurs the distinction between light and electricity, but could also enable the development of much faster and smaller electronic components well into the future.
With the limits of Moore's Law looming closer day by day, the demand for faster, smaller electronics ever increasing, and microelectronics reaching the point where quantum effects are seriously challenging the continued use of electrons as a transporter of data, researchers the world over are exploring ways to solve these problems.
With contemporary methods used to convert between electrical signals and optical ones considered largely inefficient, University of Cambridge researchers believe that it would be better simply to cut out the middleman and mix the two together. In a quest to achieve this, the researchers created a switch using a new state of matter known as a Polariton Bose-Einstein condensate to combine electric and optical signals, while consuming infinitesimally small quantities of energy in the process.
"The polariton switch unifies the best properties of electronics and optics into one tiny device that can deliver at very high speeds while using minimal amounts of power," says Dr Alexander Dreismann from Cambridge's Cavendish Laboratory.
To create a Polariton Bose-Einstein condensate, laser light is first captured between mirrors in a microcavity just a few microns in size. Here the light interacts with thin sections of semiconductor material to produce a half-light, half-matter combination of quasi-particles known as a polariton, which are made up of semiconductor excitons (excited electrons bound to the hole produced by their excitation) and photons .
If large amounts of these polaritons are generated all at once in a confined space, they tend to clump together and condense like water vapor does when it encounters a cool surface. The light-matter fluid that forms at this point is also imparted with a particular spin, where it can spin clockwise (up) or anticlockwise (down). To make the direction of spin controllable, and therefore usable in an electronic context, the researchers induced an electric field within the condensate, making it possible to switch between up and down states at will. As the polariton fluid also produces light as it rotates, the researchers believe that spin encoded light could be used to convert electrical data to optical signals that can be sent through optical fibers.
"We have made a field-effect light switch that can bridge the gap between optics and electronics," says Dr Hamid Ohadi, from the Cavendish Laboratory. "We're reaching the limits of how small we can make transistors, and electronics based on liquid light could be a way of increasing the power and efficiency of the electronics we rely on."

"The international monetary order is more precarious by far today than it was in 1929. Then, gold was international money, incorruptible, unmanageable, and unchangeable. Today, the U.S. dollar serves as the international medium of exchange, managed by Washington politicians and Federal Reserve officials, manipulated from day to day, and serving political goals and ambitions. This difference alone sounds the alarm to all perceptive observers."

Hans F. Sennholz

The monthly Coppock Indicators finished July

DJIA: 18432  +03 Up NASDAQ:  5162 +10 Up. SP500: 2173 +01 Up.

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