I have been away from my home base for three weeks and am now trying to gather some thoughts on the important geopolitical and geo-economic events that transpired. Few readers of this blog would doubt WWIII is happening before our eyes and according to experts who study war cycles, 2025 to 2027 would probably be the time when we witness full scale global armed conflicts. Before that time, we all are experiencing an unhealthy dose of toxic misinformation and disinformation that are targeted to distract us from making the right choices. As a Christian, we have been taught certain defensive measures that would be useful in hatever warfare before us. I like to share these golden nuggets here for the benefit of all, irrespective of your philosophical or religious inclination.
1. Truth: A wise saying “The first casualty of war is truth”. In times of turbulence and chaos it is so much more necessary that we are to make “informed” choices. Armour ourselves with truth is a first step for war preparation. Truth, however, is not some web site called Fact Check. Truth is also not an algo driven search engine ranking narratives in prominence only when in compliance with the edicts of the powers. Truth is not an AI called Chatgpt because, when a significant portion of data that Chatgpt screened were previously filtered through political censorship, AI becomes just a parrot (Fig.1).
The chart shows Chatgpt are bound by the algo rules of Correspondence, Coherence and Pragmatism meaning whoever can jam the data universe with the largest number of statements, biased as they may be, “truth” is a numbers game. Let me illustrate this point by using the try and tested method of “Follow the Money” on popular myths of the past 3 weeks.
(i) Renewed Attack by the Anglo American Empire against China: A barrage of provocations against China has recently been launched: a strayed civilian weather dirigible been accused as a spy craft; unsupported accusation of lethal arms supply to Russia by China and a rehash of the origins of Covid-19 as lab leaks from Wuhan. The latter despite a definitive investigation to the contrary by WHO. All these whilst US Administration Officials from the State, Treasury, Defense and Commerce departments desperately tried to establish a dialogue with Beijing. Why?
(ii) US Interest Rates spiked up again: (Fig. 2) shows a spike up of YR2 yields since February 2023 after a period of softening inflation.
The reversal of sentiment came after a shocking BLS release of January 2023 employment growth of 517,000 as against market expectation of 187,000. (Fig. 3)
Biden, then MSM immediately went all gung-ho on how robust the US economy is galloping. For people who are remotely interested in the shenanigans of the Anglo American finances are very likely be swayed by this concerted onslaught of propaganda. For people who paid attention to US trickeries, what a joke! On a monthly basis BLS does not carry out a real headcount of job creation, the employment numbers are derived from a “birth death model”. The birth-death ratio is an estimate of the net number of jobs in a given period that have been created by new businesses, or births, and lost to business closings, or deaths. Historically, approximately 3 million jobs are shed in January after the peak temporary employment month of December because of the Christmas gifting and holiday seasons. For January 2023, by revising 3 key indices in the birth death model, half a million jobs is seasonally adjusted to be not made redundant. All these robust job creation happens at a time when mass layoff news hit every 45 minutes (Fig.4).
To reinforce the robust economy narrative, CTA (Commodity Trading Advisory), an algo driven highly leveraged derivative centered hedge funds were mobilized to move the markets, shorting bonds, stocks, commodities, FX in support of the USD. Of course BLS January 2023 employment numbers alone would not be persuasive enough , so out came another surprise, the January retail sales came out 3% higher than December. (Fig.5).
Remember Christmas sales averaged 19% of annual sales, the January retail sales numbers was indeed another shocker! With further CTA action, hawkish Fed Open Mouth Policy added to short squeeze, the majority of momentum traders once again follows the mantra of “Don’t Fight the Fed” and voila, a complete reversal of sentiment happened. “May be indeed the US economy is strong after all.” The real picture of course is another matter (Fig. 6).
US Real retail sales was flat as a pancake, the advanced estimate for January nominal retail sales (like the BLS employment stats, is highly “seasonally adjusted ”) were just inflation price froth rather than real unit sales growth. In another statistics, US Redbook sales began to rollover once the free cash stimulus stopped and as inflation and interest rate hit hard, real unit sales volume were actually on a rapid decline. (Fig. 7).
What then is the purpose for such concerted propaganda that the US economy remained strong and further interest rate hike is necessary to contain inflation?
(iii) Harakiri - In my December 17 2022 Blog, titled “Zombiefied”, I mentioned the Federal Reserve were running deficits of $14.3 billion per week. The losses have now swelled to $38.2 billion per week. ($2 trillion losses annualized) (Fig. 8).
Further interest rate rises means bigger losses. For a nation with $31 trillion debt and rising, a 6% interest rate means a $1.8 trillion interest payment. $1.8 trillion is equivalent to the GDP of Italy. Both the Federal Reserve and the US Treasury is committing an act of Harakiri and those in the know clearly understands the road to perdition is right before us all. For those who study closely on US finances, a deep recession is likely to break in June 2023. This is evidenced by the steepest of yield curve inversion since Oct 1979, some 43 yeas ago. (Fig. 9).
1979 was when the USD was in crisis with a default of Bretton Woods Agreement and is exactly a forerunner of the Global De-dollarization which is happening today. In the previous incident, there was a reversal of policy which began a month and a half later as the US economy and banking system could not take such pressures and the whole system was at the edge of collapsing. We expect the hawkish Powell would look quite differently two months on from today. In this game of chicken, those who blinked will likely end up as lunch for their opponents. Allow me to refresh your memories on who bought and who dumped US Treasuries in the year 2022 (Fig. 10).
The Global South is unlikely to reverse course on the path of de-dollarization, no matter how high the Federal Reserve may bait interest rates, because USD has become a matter of “National Security”. In the meantime, the Fed printing press continued to run hot 24/7 (Fig. 11)
2. Other Defensive Measures - Due to time away from my home base, the rest of the Defensive Measures will need to be covered at a later more opportune time. My apologies.
Ephesians 6:10 Finally, my brethren, be strong in the Lord and in the power of His might.11 Put on the whole armor of God, that you may be able to stand against the wiles of the devil.12 For we do not wrestle against flesh and blood, but against principalities, against powers, against the rulers of the darkness of this age, against spiritual hosts of wickedness in the heavenly places. 13 Therefore take up the whole armor of God, that you may be able to withstand in the evil day, and having done all, to stand. 14 Stand therefore, having girded your waist with truth, having put on the breastplate of righteousness,15 and having shod your feet with the preparation of the gospel of peace;16 above all, taking the shield of faith with which you will be able to quench all the fiery darts of the wicked one.17 And take the helmet of salvation, and the sword of the Spirit, which is the word of God;18 praying always with all prayer and supplication in the Spirit, being watchful to this end with all perseverance and supplication for all the saints—
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