Signed by Gov. Gavin Newsom (D) after being vetoed twice by his Democratic predecessor Jerry Brown (who said that educators can work through family members or law enforcement if a restraining order is required), the gun confiscation bill is so broad that the ACLU said it "poses a significant threat to civil liberties" since guns can be seized from owners before they have an opportunity to contest the requests, and those making the requests may "lack the relationship or skills required to make an appropriate assessment," NBC San Diego reports.

All that's needed for a co-worker or educator to file a complaint is to have had "substantial and regular interactions" with gun owners, along with permission from their employers or school administrators. Those seeking the orders will be required to file a sworn statement outlining their concerns. 

The author of the bill, Democratic Assemblyman Phil Ting of San Francisco, said that "With school and workplace shootings on the rise, it's common sense to give the people we see every day the power to intervene and prevent tragedies," citing a recent study which found that 21 mass shootings may have been prevented by a gun restraining order. 

Meanwhile, a companion bill signed by Newsom and written by Democratic Assemblywoman Jacqui Irwin of Thousand Oaks allows gun violence restraining orders to last one and five years, though gun owners would be allowed to petition the state to get their guns back earlier. In another Ting-authored companion bill, gun owners who agree to voluntarily surrender their firearms can notify the court via a form, vs. a hearing which Ting says wastes time and resources. 

The National Rifle Association (NRA)'s Amy Hunter, meanwhile, said of another bill signed on Friday (SB 61) which prohibits Californians from buying more than one semiautomatic rifle per month, and bans the sale of such rifles to those younger than 21: "This bill places burdens on law-abiding residents," adding "It will not make anyone safer." 

Republican state legislators criticized the one-gun-a-month bill, as well as the state's failure to remove guns from the thousands of felons and the severely mentally ill as they are already empowered to do so. 

"Instead we continue to do more and more legislation that interferes with the law-abiding citizen’s right to own and possess firearms, which is their constitutional right to do," said Yuba City Republican Assemblyman James Gallagher (LA Times). 

According to the Times, other bills signed Friday by Newsom will:

• Allow those subject to a gun-violence restraining order to submit a form to the court voluntarily relinquishing their firearm rights


• Require firearm packaging to contain a warning statement on suicide prevention


• Mandate that county sheriffs who issue licenses for concealed weapons charge a fee covering the cost of vetting the applicant, thus eliminating the current $100 cap on fees


• Prohibit gun shows at the Del Mar Fairgrounds in San Diego County


• Require, starting in 2024, that the sale of components used to build a firearm — often used to build untraceable “ghost guns” — be carried out through a licensed vendor.

You will find more infographics at Statista

This, of course, puts the Turks in a growing confrontation with the region’s Kurds, who have occupied large swaths of the area during Syria’s civil war.  The Kurdish militia, known as YPG (confusingly part of the so-called Free Syrian Army), is armed, lavishly financed and directed by the CIA and Pentagon.

Most Kurdish forces are deployed along the line of the former Berlin-Baghdad railway, a major source of warlike tensions before World War I.  Interestingly, Turkey’s president, Recep Tayyip Erdogan, was making a state visit to blood enemy Serbia when the Turkish offensive kicked off.

Turkey calls the Kurdish militias ‘terrorists’ and links them to the original Kurdish resistance movement PKK which is on the US and Turkish black list.  I covered the brutal conflict in eastern Anatolia (southern Turkey) between the Turkish Army and Kurdish militias known as ‘peshmerga.’ If the US can brand Syrian and Iraqi groups ‘terrorists,’ why can’t the Turks do their own terrorist branding? After all, Syria, Lebanon and Iraq are in their backyard.

You will find more infographics at Statista

The US media is fiercely anti-Turkish because Ankara is seen as somewhat pro-Palestinian.  Israel is a bitter foe of Turkey’s Erdogan.  One rarely reads anything positive about Turkey or its leader.  Not very many western readers even know that since the early 1500’s, Syria was part of the Ottoman Empire, the predecessor of modern Turkey.  So were Iraq, Palestine, today’s Israel, Saudi Arabia, and Yemen.

Most important, Iraq’s vast oil fields used to belong to the Ottoman Empire until the British Empire grabbed them at the end of World War I.  France seized Syria and Lebanon. Both former imperial powers are still mucking around today in the region and have the gall to criticize Turkey’s involvement in neighboring Syria.

The United States has zero historic interest in the region. US troops in Syria appear to have come from the US garrison in Iraq, which, as VP Dick Cheney hoped, would become a central US military base for the entire Mideast.  The Washington war party is moaning that Trump has ‘betrayed’ the Kurds.  Their unofficial head, Sen. Lindsey Graham, is demanding more war in Syria – the same warrior senator who dodged the Vietnam War by joining the National Guard as a lawyer.

The Kurds have been used and betrayed since 1918.  They always seem to get the short end of the stick.  The old Kurdish saying, ‘no friends but the mountains,’ is painfully true.  Washington does not want to get involved in a new Kurdish state carved out of Syria or Iraq even though Israel is pushing it hard to further splinter the Mideast.  Iraq’s and Syria’s oil deposits are still a powerful lure for imperial-minded powers.

Trump rightly calls the fracas in Syria ‘a stupid war.’  But many pro-war forces play on this tired, confused president who has gotten himself deep into the Syrian morass, a problem of largely American but also Turkish making.  Ironically, former president Barack Obama foolishly authorized America’s effort to overthrow Syria’s Assad government under the guise of a phony civil war.  This was one of the few Obama policies that Trump chose to follow. The neophyte president was unwilling or unable to prevent the deep state in Washington from encouraging the war.

The region in question is hardly the beating heart of Syria. It looks large on the map but is mostly desert and scrub, dotted by miserable little villages with Arab or Kurdish populations.  Turkey, which has over 2 million Syrian refugees, is eager to begin repatriation of this massive burden created by its policy errors and the western powers.

In the middle is the scattered debris of the short-lived ISIS caliphate.  Russia, which is selling Turkey its very capable S-400 anti-aircraft system, is watching with delight as old allies Turkey and the US split.

Even Trump knows how important Turkey is to the NATO alliance.  A rupture between Washington and Ankara could see the vital US bases at Incirlik and Adana thrown out of Turkey.  That’s why Trump needs to tread carefully.

The “SunTrust Agency Shortcut” loan program – and what is essentially a “hack” of the Fannie Mae automated underwriting system (AUS) -- was a massive, egregious whole loan origination scheme estimated at over 175k individual transactions nationwide for over $30 BILLION.  In fact, the dollar volume of questionable conforming loans originated by SunTrust Mortgage and sold to Fannie Mae exclusively is larger than SunTrust Bank’s market cap today.

The following is my research, evidence and summary material on the “SunTrust Shortcut” mortgage scheme. The name “Shortcut” speaks volumes by itself. But this scheme was unlike others from Countrywide for example.

I am releasing this information widely for public good and posterity, so this specific negligence is documented in hopes it never happens again.

SunTrust “Agency Shortcut”: Backgrounder

I spent the entirety of the mortgage and housing bubble on the front lines of the mortgage industry. I saw all the excesses, outright fraud and cognitive dissonance first-hand. I knew where all the bodies were buried when it all came apart despite banks, mortgage companies, investors, Wall St banks, David Lereah (blast from the past!) Ace Greenberg and the Fed all day, wall-to-wall in the financial media, telling everybody there is ‘nothing to see here’.

During the crash and recovery period, I operated as a professional financial analyst, researcher and advisor to the financial services and public sectors. From early 2006, when I first became fully convinced that all hell would break loose in mortgage and housing, I made a list of 48 mortgage and related publicly traded names that I thought were the worst or hidden offenders and have the potential to zero-out. I maintain research files on these companies tracking everything they did, would do and their outcomes to this day.

Most of the worst mortgage offenders either failed, were absorbed (willingly or forcibly), or paid heavy penalties to the Obama DOJ, some several times over. Most of the legal matters and settlements were for common, cookie-cutter things like FHA origination/sale fraud, servicing misconduct, foreclosure & mortgage modification dereliction, and securitization fraud.

However, a few companies skated for some reason or another. SunTrust Mortgage, a subsidiary of SunTrust Bank at the time, is one. Its residential mortgage “misconduct” was among the worst of the housing Bubble. Few know about this history of SunTrust and their particular legacy mortgage origination ‘indiscretions”, so egregious, they would make Angelo Mozillo blush, and which residually live on to this day.

SunTrust’s $30+ Billion Unknown Legacy Mortgage Malpractice: Introduction

SunTrust Mortgage enacted one of the largest whole loan origination malpractice schemes in the ‘Bubble Years’. To date, this egregious misconduct has never been discovered, unpacked, prosecuted, or settled by regulators or a class. 

[It’s important to note that the actual “SunTrust Shortcut” scheme was not covered when SunTrust essentially “bought-out” their Fannie and Freddie rep and warranty liability in Oct 2013 (however, the Shortcut loan significantly increased Fannie defaults and repurchases and if Fannie would have known the fine details the settlement may have been larger). Nor, was the SunTrust Shortcut scheme the basis for the July 2014 $320 Million HAMP or $968 Million (largely FHA related) settlements.]

In summary, SunTrust’s commissioned-based loan officer and underwriter employees essentially learned to ‘hack’ Fannie Mae’s AUS to achieve a “special feature code” on certain popular “fully documented, prime” loan programs they offered. This code was unique to the SunTrust “Agency Shortcut” loan. The name “Shortcut” speaks loudly. This code enabled them to originate, fund and sell these loans missing critical supporting documentation that made them “fully documented”, prime loans in the first place. The resulting loans sold to Fannie Mae exclusively were far worse in quality than program guidelines called for or Fannie knew it was buying.

These low-quality (closer to “Alt-A” than Prime) loans were sold as high-quality, fully documented prime loans and ultimately peppered throughout Fannie MBS. Once the hack was used successfully and refined during the first year it led to a significant increase in loan volume for the Bank at a time when other lender’s and Fannie’s volume was flagging, which was a red flag itself.

From then, it spread like wildfire throughout the company and all lending channels and departments. Before too long, the SunTrust Wholesale division (TPO; Third-Party Originators; Mortgage Brokers) was training mortgage brokers nationwide how to hack the SunTrust Fannie Mae Automated Underwriting System.

Through power of “TPO”, SunTrust was able to act and take on risk like a bank several times its size. After a while, the misconduct was so pervasive and a part of every-day business that a cognitive dissonance set in companywide that what they were doing was not prudent, which perpetuated the mortgage misconduct.

All told, SunTrust originated up to 175,000 “Agency Shortcut” loans nationwide for over $30 Billion over about two years from thousands of SunTrust employee and Third-Party Originator (TPO) conspirator-partners nationally making it one of the largest, longest running and widest spread whole loan origination malpractice schemes of the credit/housing bubble.   

This elegant, intentional, Fannie Mae Automated Underwriting System driven and enabled scheme was differentiated from any other of the period, as thousands of SunTrust commissioned production employees, production support personnel and TPO partners all had hands-on, specialized roles carrying out the misconduct and all benefitted from it.

SunTrust’s mortgage misconduct was highly differentiated and grand in scale. To an analyst, investor or regulator less acquainted with the fine nuances of the mortgage credit and capital markets their misconduct might appear to fit in the mold of the numerous, more ‘vanilla’ mortgage indiscretions that were discovered, investigated and prosecuted or settled over the past decade. But SunTrust’s mortgage misconduct was one-of-a-kind.

In the fullest interest of transparency in markets the general public need to know that these indiscretions did in fact occur and fully examine what occurred. Tens of thousands of homeowners, investors and municipalities were financially injured. While a high relative percentage of these bad loans resulted in default, foreclosure or modification thousands of them, largely 30-year fixed rate in nature, still exist in SunTrust’s and other lender’s servicing portfolios and are identifiable. 

The following is a summary of the SunTrust “Agency Shortcut” scheme.

SunTrust “Agency Shortcut” Scheme Overview

During the credit bubble SunTrust Mortgage was an influential retail, wholesale and correspondent lender, the latter two channels pertaining to the riskiest origination funnel, TPO (Third-Party Originations).  TPO – co-opting thousands of local mortgage brokers and bankers in the best lending markets in the nation -- allowed SunTrust, a relatively small bank and mortgage company, to lend at scale virtually nationwide despite not having a network of traditional brick and mortar bank branches in most states. Instead, it established about a dozen strategically located mortgage sales, processing, underwriting and funding operations centers in large, major metropolitan areas that were exclusive to mortgage and capable of extracting a high volume of business from states outside their bank footprint. 

Through the power of TPO SunTrust was able to compete with massive financial institutions like BofA, Chase and Wells Fargo as equals in loan program variety, origination and secondary market activity but without all the fixed overhead. This was great when the credit markets were compliant as the credit bubble grew. But, when the tide turned it left smaller, TPO-heavy lenders -- that had been pretending to be mega-national banks for the purposes of mortgage lending -- without the balance sheet wherewithal to be able to manage through it. Furthermore, TPO loan volume was so large -- absolutely and as a percentage of their total volume -- and concentrated in the riskiest, high-flying regions it left banks such as SunTrust with massive representation and warranty exposure that dwarfed their loan and legal reserves for years afterward. This forced management into numerical and verbal gymnastics in quarterly financial statements and investor calls for years about such exposure either not existing or being mitigated years sooner than it ever could be.

During the years of 2006 to 2008 – interestingly, these years that encompass the beginning and official start of the credit and housing market collapse, a time other lenders were cutting off exotic loan programs and even shutting down the ability to draw on existing HELOCs -- SunTrust Mortgage originated for sale to Fannie Mae between $19 Billion and $38 Billion in “Shortcut” loans. The name “Shortcut” defines this misconduct well and is reminiscent of names given to other poor-quality exotic loans by lenders such as the Countrywide “Fast & Easy” and “Hustle”. 

The “Shortcut” was SunTrust’s entrant into the high-volume, low-quality, originate-for-immediate-sale game. In fact, based on the timing, it’s obvious that SunTrust took advantage of other lenders leaving the exotic mortgage field or going out of business in order to capture loan volume and revenue through this misconduct.

Shortcut loans were labelled and sold as “fully documented prime” loans but in fact were all missing all of the exact income and asset documentation that makes a mortgage loan “fully documented” in the guidelines of Fannie Mae and investors in its mortgage backed securities. SunTrust quietly discontinued the loan program after two years in 2008 amidst a rush of failing lenders and significant scrutiny by Wall Street, the media and regulators.

Sure, some lenders and capital markets players originated and sold more than $30 billion in GSE residential loans or securities. But SunTrust was the only lender that had a national loan origination manufacturing production line built on malpractice and co-opted/taught thousands of their own bank-employee loan officers and underwriters and well as mortgage brokers and bankers to commit this highly specific mortgage misconduct from their own private PC’s on nearly 200,000 loans through a learned “hack” of Fannie Mae’s Automated Underwriting System.

SunTrust “Agency Shortcut” Scheme Details

Primarily: In their various earnings reports and filings, from 2006 on, SunTrust Bank (“STI”) and its wholly-owned subsidiary SunTrust Mortgage (“STM”) repeatedly misrepresented and omitted disclosing the risks associated with an “Alt-A” Stated Income/Stated Asset (“SISA”) loan program they co-developed for sale to FNMA, named “The Agency Shortcut Mortgage” (“Shortcut”), which was offered from mid-2006 to April 2008.

Also: STM originated and sold to Fannie Mae over $30 Billion of questionable loans that were much closer to “Alt-A” or “subprime” than prime. Shortcut’s atypically lax qualification guidelines (compared to industry standards) and its “same-as-full-doc” pricing meant STM would originate a large volume of these loans. As STM failed to institute meaningful internal controls that could have prevented commissioned sales personnel from submitting non-conforming, questionable and fraudulent loan applications, and as management turned a willful blind eye to problems (such as increasing Early Payment Default rates) when they came to light, the huge volume of Shortcut loans was even lower in quality than most Alt-As/SISAs.

Finally: As misconduct begets more misconduct, STM co-acted with the various Private Mortgage Insurance Companies (“MI Companies”) to cover-up the “reduced doc” nature of the Shortcut Loan Program by implementing special codes - or by ignoring the reduced doc feature altogether - on the MI applications, thereby falsely representing to the MI Companies’ regulators and investors that the Shortcut was a prime/full-doc loan.

Direct victims of the SunTrust Shortcut scheme include past and present STI equity and debt investors and FNMA Mortgage Backed Securities investors. Also, US taxpayers (as a result of the FHFA’s taking over FNMA and Freddie Mac), and unwitting Borrowers (who were unable to make timely payments on oversized loans they could not afford, ultimately resulting in foreclosure) suffered damages as well.

Individual States, municipalities and their citizens were also injured as SunTrust entered these markets far away from their traditional banking footprint, popped-up TPO mortgage origination and operation centers and originated billions of bad loans. Then, when the going got tough, they closed down their operations centers and retreated back to their footprint in the Southern United States leaving far away States and their residents to clean up the mess themselves.

Furthermore, as a result of the Shortcut scheme, substantial ill-gotten gains in the form of commissions, bonuses and other income flowed to STM’s salespersons, managers, directors, TPO originators, Realtors and anybody else involved in the origination and sale process of a Shortcut loan.

(Note: Institutions such as JPM Chase/WaMu, BofA/Countrywide, and others have been found liable (or have settled claims) for victimizing Fannie and Freddie by selling low-quality mortgages that failed to meet the representations and warranties promised. Among those damaged by their frauds were the investors in the GSE’s MBSs. Regardless of the extent Fannie knew or should have known that Shortcut loans were high-risk SISAs and not prime, STI itself knew these sub-standard loans would eventually end up in Fannie MBSs, and therefore that the undisclosed risk would -at the very least - be borne by those investors.)

Summary of Evidence:

A) When developing and Deploying the Agency Shortcut Program, SunTrust knew or should have known:

1. It was a Stated Income/Stated Asset loan program (“SISA”) and - by virtue of its “reduced documentation” - therefore fit the bank’s own, in-house definition of “Alt-A.”

(Note: on SISA loans, the Borrower merely attests to his/her income and assets on the loan application and does not provide the pay stubs, tax returns, bank statements and like-documentation to support those figures.)

2. SISAs - ubiquitously called “Liars’ Loans” - were known to be susceptible to fraudulently overstated income and asset figures and carried an outsized risk of serious delinquency and default.


3. The Shortcut program served to implement the dual strategies STM disclosed at the 2006 Mortgage Bankers Association convention to: a) reduce loan processing times from 61-110 days down to 6 days; and b) “selectively transfer credit risk to other investors” (in this case, FNMA and, ultimately, Fannie’s MBS investors).


4. By offering Shortcuts at the same price as full doc - which was more than 2 points (or over .50% in rate) cheaper to the Borrower - they would capture a higher market share and originate substantially more volume than they otherwise would have, so not only would the Company’s short-term Gross/Net Income increase, but also commission, bonus and other income for certain personnel.


5. The mortgages would eventually be placed into FNMA MBSs, but not properly identified as Alt-As/SISAs.  Therefore, the MBSs investors would not be able to properly assess the riskiness of those pools…and the losses would be eventually be borne by those investors (via less-than-anticipated ROI/opportunity costs) and by Fannie (via their guarantees).


6. As soon as STM actively marketed the availability of the program, it transformed the program from an ostensibly “Lender-Selected SISA” into a “Borrower-Selected SISA” and DQ/Default percentages would thereby skyrocket.

(Note: “Lender-Selected SISAs” are those wherein the Lender decides unilaterally not to review income or asset documentation because the overall risk of the loans(based on dubious criteria) are deemed sufficiently low and thereby presents an opportunity for the lender to reduce its own processing costs - and usually are offered to the borrower at the same rate and price as full-doc loans; “Borrower-Selected SISAs” are those wherein the Borrower specifically requests not to provide income and asset documentation to the lender and - usually - pays an increased rate and/or price for that feature. It’s been reported that “Lender-Selected SISAs” default at 1.4 times Full Doc loans; Per FNMA Filings, Borrower-Selected SISAs default at more than 5 times the rate of Full Doc loans - and that number actually is lower than the true rate due to FNMA’s definitions and methodologies.)

7. By not requiring a Borrower-signed IRS form 4506 as part of the loan application - and by advertising such in their promotional materials - STM overtly invited Borrowers and Brokers to submit fraudulent loan applications.

(Note: A signed IRS Form 4506-T allows a lender to obtain a Borrower’s tax transcripts from the IRS to confirm income stated on the loan application is reasonably accurate, and - even when not exercised by the lender - serves as a deterrent to fraudulently overstated income on mortgage applications.)

9. By failing to place adequate controls on brokers and commissioned salespersons in processing of the Shortcut loans - and by instructing them that the income stated on the application need merely be “reasonable” (as opposed to “accurate”) - STM subverted any meaningful risk assessment of the individual loans by their own underwriters.

(Note: examples of inadequate controls included allowing commissioned salespersons and their assistants to run the Automated Underwriting System (“Desktop Underwriter” or “DU”), allowing them to run DU an unlimited number of times, and instructing them they could evade underwriter scrutiny by inputting “reasonable”- not “accurate” - income and asset figures. These lax processes allowed the commissioned salespersons, etc. to modify the various inputs in DU until they reached an optimal configuration that resulted in a Shortcut approval.)

10. The riskiness of SISA programs without 4506s - characteristics which carried at least a 2.125% (price) premium from their peers and competitors - far outweighed the benefits, if any, of requiring a (rather modest) 680-plus FICO score;


11. By allowing monthly debt-to-income (“DTI”) ratios as high as 64.99% - far higher than the standard for prime loans, Shortcuts would devolve into something even closer to subprime.

(Note: industry standards for maximum DTI on SISA products were more commonly 45% - 50%, depending on the lender and/or other loan characteristics, such as LTV/CLTV and/or FICO score.)

12. By advertising “No Payment Shock” publicly and to mortgage brokers as a feature in marketing materials STM obviated yet another risk assessment.

(Note: “Payment Shock” is a term that describes a significant increase in a borrower’s housing payment as a result of the new loan. If DTI ratios are fairly elevated, underwriters traditionally look to the borrower’s “ability to save” as indicated by their liquid assets as an offsetting factor to determine whether the borrower can handle the increased debt load.)

13. Inconsistencies of Shortcut’s SISA characteristics versus its ersatz “Full doc” labeling had to be reconciled with the MI companies, such that “special negotiations” were required to resolve those inconsistencies.

(Note: Shortcut loans submitted to a majority of the MI companies required “special coding” and - to the extent that the MI companies may have failed to properly disclose to their own regulators and investors the full extent of reduced-document loans on their books - they may have been complicit in a related fraud.)

13. The difficulties in placing a “Combo 2nd NIV” - (“NIV” = “No Income Verification”) - loan behind a Shortcut First mortgage created special difficulties, because including any income or asset documentation in a loan file - regardless whether it supported or contradicted other data in the file - disqualified it from Shortcut. Initially, STM required that underwriters use a cumbersome form (“The Agency Shortcut Mortgage Eligible Secondary Financing Checklist”) to reconcile the asset documentation requirements otherwise required on the Combo 2nd NIVs with the inability to include those same documents on the Shortcut.

(Note: “NIV” loans - which were offered by numerous lenders - are incrementally less risky than SISAs, as the Borrower’s Liquid Assets are reviewed and are generally required to be at least a given multiple of the Borrower’s stated monthly income. Also: Due to difficulties in requiring its employees to walk such a thin line re asset verifications - and following too many improperly completed “Checklist” forms - eventually STB reconfigured the Combo 2nd NIV program and abandoned the asset-verification requirement altogether, pricing the program slightly higher to include a “Shortcut Documentation Feature,” effectively turning the Combo 2nd into a SISA.)

B) During the SunTrust Agency Shortcut program’s lifespan, SunTrust knew or should have known:

1. Early Payment Defaults (“EPDs” - deemed industry-wide to be a strong indicator of fraud) were rising significantly by summer 2007, yet - other than tepidly advising underwriters “to be on the lookout for fraud” - few significant steps were taken to reduce EPDs.


2. The number of submissions to Fannie Mae DU on Shortcut loans was positively correlated to delinquencies and defaults, but it wasn’t until a couple of months prior to the termination of the Shortcut program - and then only at FNMA’s insistence - that a limit of 15 runs (still high) was imposed.


3. SunTrust employee Account Executives (and their assistants and processors) “manufactured” Shortcut approvals in DU by “laddering” income and/or otherwise tweaking their inputs, not infrequently submitting loans to DU more than a dozen times.


4. Wholesale area managers encouraged the AEs (and/or their support personnel) to run DU for their third-party client brokers - ostensibly as a “value-added” service, but actually because it increased the likelihood that STM employees (with more experience and understanding of the nuances of DU’s algorithms that generated Shortcut approvals) would input figures that would produce the desired outcome.


5. Various “enhancements” to the program which were added periodically through most of 2007 served to make the Shortcut underwriting guidelines even “looser.” By December 20, 2007 - and only in the face of indisputably poor loan performance of the Shortcut - some of the program’s loosest guidelines were finally tightened, but even then, they still remained far looser than more traditional underwriting guidelines.

(Note: some of the “tightening” that occurred in December, 2007 (not “mid-2006” as stated in numerous SEC filings) included no longer allowing “outstanding mortgage delinquencies at time of application” or Property Inspection (Appraisal) Waivers - low-level qualification guidelines which really should have been implemented from Shortcut’s outset.)

6. Area managers - taking their cues from an “anything goes (so long as its ‘sellable’)” mentality that characterized STM’s mortgage operations and from upper management’s mandate to reduce loan processing times - cut corners for risk assessment in not only the Agency Shortcut Program, but other loan programs as well.

(Note: For example, underwriters who questioned the validity of various file components were routinely told by managers to “just go with what you have” and approve the loan. At least one STM region’s policy included moving income, asset, and other critical verifications on Full-Doc loans from “prior to (loan) doc” conditions to “prior to funding” conditions - which served further to pressure underwriters from making adverse decisions. It was no surprise, then, when a complaint issued by the NY Atty. General in October 2012 against JPM Chase/Bear Stearns on shoddy mortgages singled out SunTrust for its eye-popping 86% defect rate on the originations they sold to Bear Stearns.)

7. Despite guidelines ostensibly requiring “reasonable” income be stated on loan applications, a significant number of Shortcut loans did not meet even to that low standard. Management routinely gave “override” approvals on files the underwriters deemed to have suspect income and/or other shortcomings, and - to the WB’s knowledge - not once did management recommend a loan be declined when the underwriter thought it should be approved.

(Note: it was not until late-summer or fall of 2007 that underwriters were provided with even minimally adequate tools with which to assess reasonableness of salaried income borrowers. Regardless, managers still overrode the guidance offered by such tools, and routinely allowed “higher-than-reasonable” income to be used nonetheless.)

8. HMDA data showed STM’s loan declinations overall - and specifically declines due to insufficient income - were substantially lower than their banking peers and competitors during the Agency Shortcut’s lifespan.

(Note: In 2007, SunTrust declined 4.4% of its applications and only 1.2% due to income; By way of example, Wells Fargo’s numbers were 18.6% (applications) and 3.6% (income) and BofA’s were 17.0% (applications) and 8.6% (income).)

9. “Fallout ratios” (i.e. loan applications submitted but not funded) increased substantially after termination of the Shortcut Program, doubling or tripling for some commissioned salespersons.

(Note: This suggests, of course, that significantly fewer loan approvals could be manufactured without the “crutch” of allowing commissioned personnel to input falsified income and asset data into DU and generating Shortcut approvals.)

As part of his plea, Arbab admitted to falsely promising investors, including UGA students, returns as high as 56%. He told potential investors that a UGA alumnus who went on to play in the NFL had invested with him in order to convince football fans to trust him with their money. 

He also falsified investment returns, according to the complaint, after allegedly losing more than $300,000 trading. 

During the course of the alleged scheme, Arbab allegedly lost more than $300,000 in trading, leaving just $350 when his brokerage account was closed, the complaint said. Arbab also allegedly tricked clients into sending money to earlier investors through digital payments services such as Zelle and Venmo, telling the client the money was being sent to other partners or employees.

Arbab also claimed to be an MBA candidate, but had instead been rejected by UGA's graduate program. He admitted to using investor funds to cover alcohol purchases, gambling during three trips to Las Vegas and "adult entertainment".

He will be sentenced in January 2020.  

That was downgraded last week to testimony "in writing." 

And finally, on Sunday, Schiff told CBS' "Face the Nation" that the whistleblower's testimony might not be needed after all. 

"Yes, we were interested in having the whistleblower come forward," Schiff said, to which host Margaret Brennan asked "but not anymore?"

"Well, our primary interest right now is making sure that that person is protected ... given that we already have the call records we dodn't need the whistleblower, who wasn't on the call." 

Watch: 

Rep. Adam Schiff, House Intel chair, hints that his panel may not interview the whistleblower over concerns about protecting their identity.


Schiff says on Face the Nation that they already have the transcript of call b/t Trump and Ukraine, which is center of w/b complaint

— Heather Caygle (@heatherscope) October 13, 2019

House Democrats launched their impeachment inquiry into President Trump after the whistleblower claimed Trump was abusing his office and 'pressuring' the new president of Ukraine, Volodomyr Zelensky, to investigate former Vice President Joe Biden and his son Hunter for alleged corruption.

After the White House released a transcript of the call, however, it was clear that no pressure was applied. Zelensky, meanwhile, has said on multiple occasions that there was no pressure or 'blackmail' involved in the request, and that Ukraine would "happily investigate" the Bidens. 

Further crumbling the Democrat credibility is the fact that Schiff lied when he said that his panel had "not spoken directly with the whistleblower," a claim which earned him four pinocchios from the Washington Post for his "flat-out false" statement when it was later revealed that the whistleblower approached Schiff's panel - which then directed him to a Democrat attorney.

"Schiff on 'Morning Joe' clearly made a statement that was false," said the fact-checker. "He now says he’s was answering the wrong question, but if that was the case, he should have quickly corrected the record. He compounded his falsehood by telling reporters a few days later that if not for the [inspector general's] office, the committee would not have known about the complaint. That again suggested there had been no prior communication."

A House Intel Committee spokesperson told The Post that Schiff's reply "should have been more carefully phrased." 

So here we are - with Schiff and House Democrats are continuing forward with their impeachment inquiry as if Trump hadn't released the transcript, and their accuser's credibility wasn't eroding by the day. 

So focusing on aggregate metrics, the strength in the US consumer seems patently obvious. But could this top-down analysis be overlooking potential sources of weakness? Since the household experience is quite different across income groups, we take a bottom-up approach to see where cracks may be appearing.

Let’s start by delving into the low aggregate consumer debt-to-income ratios and delinquency rates. Mortgages constitute about 70% of consumer debt. It’s worth noting that, post-crisis, mortgage debt has been highly constrained, producing an upward shift in mortgage credit quality – the current median FICO score of mortgage originations is over 750 versus ~700 pre-crisis. Unsurprisingly, delinquencies are low when lending in the largest segment of consumer debt is limited to high-quality borrowers. Furthermore, as homeownership rates plummeted from a pre-crisis high of 69.2% to 64.1% currently, the share of households with mortgage debt has declined. Add in sustained low interest rates, and it’s no wonder that debt-servicing rates relative to median incomes sit at multi-decade lows.

But the New York Fed’s financial obligations ratio tells a different story, as our residential credit strategists have recently demonstrated. With the decline in homeownership, the share of rental households has risen, as have rents, which are not included in aggregate debt-servicing costs. In addition to standard debt payments, the financial obligations ratio includes payments towards rent, auto leases, homeowners' insurance and property tax payments, with rents representing the bulk of these non-standard obligations. Looking at this ratio together with debt-to-income, we can tease out the impact that increasing numbers of rental households paying progressively higher rent is having on the health of the consumer. The spread between these two ratios stands at the widest level since 1980. Renters generally tend to be younger, and at the lower end of the income spectrum versus homeowners. Aggregate consumer metrics fail to capture the growing stress on rental households.

For a window into lower-income households’ finances, we focus on auto loan delinquencies in ABS pools. Lower-income households also tend to correlate well with lower credit scores. Within consumer debt, student and auto loans have grown significantly over the last several years, and the share of lower-credit borrowers getting auto loans has seen a meaningful increase. Prime auto delinquencies are at their lows for this time of year since 2014-15, as expected, but non-prime delinquencies are above crisis-era peaks. This suggests another crack in the strength of the consumer at the lower end of the credit and income spectrum.

The bottom line: While the US consumer’s balance sheet is in fine shape overall, mainly because levels of debt and debt-servicing costs remain low, there’s a segment whose income statements are under stress –rental households with lower income and lower credit scores. How big are they? Not small, at least on one metric: borrowers with FICO scores below 650 account for about 28% of the population. If the direction of gains in employment reverses, look for the cracks highlighted by our US economics, cross-asset and equity strategy teams to widen.

These cracks tend to lead an overall downturn in household creditworthiness, so we’re keeping a careful watch to see if they spread to other segments of consumer debt and eventually creep up the income chain.

#Erdogan's adviser Yasin Aktay spoke to the Russian news agency Sputnik Arabic:


"If the Syrian Army tries to enter the northeast of #Syria, #Turkey will resist. It may come to a conflict between the two armies."

— Ali Özkök (@Ozkok_A) October 13, 2019

* * *

update: It's official, after what appears a major deal between the Kurdish-led SDF and Damascus was struck in the wake of a US exit from the region: 

"Syrian military forces will be deployed on the border with Turkey by tomorrow morning in certain areas," reports Danny Makki, a well-known war correspondent in Damascus. 

This as multiple videos have spread online showing pro-Damascus forces entering Manbij:

#Update: Also another video of this Syrian Arab Army #SAA convoy advancing near into #Manbij with tanks also spotted in this convoy to help #SDF and #YPG forces drive the Turkish aggression out of #Syria. #Turkey pic.twitter.com/71CXAzZY2O

— Sotiri Dimpinoudis (@sotiridi) October 13, 2019

Erdogan has reportedly vowed that pro-Turkish forces will continue their advance despite the Syrian Army apparently coming to the defense of besieged Kurdish forces. 

What we know so far about Syrian army deployment in N. #Syria so far#Manbej #Kobani#Shiekhmaqsoud

All to be entered this evening #Qamishly #Hasakeh


Reports of gradual control within 48 hours

— Danny Makki (@Dannymakkisyria) October 13, 2019

It's as yet unclear what the Russian military's role in supporting its Syrian ally will be; however, we could be witnessing the beginnings of Putin's 'deal of the century' unfolding, as we explained previously. 

Putin is capitalizing on the chaotic retreat of the US & Turkey's brutality toward the Kurds in order to assert Russia's leadership. He contrasts how Russia has stood beside its beleaguered ally, Syria, while the US has abandoned both its allies, the Kurds and the Turks. https://t.co/NjBYZzwKCG

— Joshua Landis (@joshua_landis) October 13, 2019

But Russia is most definitely a lead player in the Damascus-YPG (and SDF) reunion that now appears to be unfolding. 

#Russia now confirmed as the chief power-broker in #Syria https://t.co/0YDFzvR40n

— Danny Makki (@Dannymakkisyria) October 13, 2019

* * *

A huge development after earlier in the day Sunday Defense Secretary Mark Esper announced Trump has ordered a "deliberate withdrawal" of 1,000 US troops in northeast Syria amid the advancing Turkish incursion: sources close to the Syrian government have announced  the Syrian Army will move in to assist Kurdish militias in Kobani and Manbij. 

This after shocking statements over the weekend by the head of the US-backed Syrian Democratic Forces (SDF), Mazlum Abdi, who told CNN, "I've been holding myself for two days from going to the press and saying that America abandoned us and that I would like you to get out of our areas now so that I can invite Russian and [Syrian] regime planes to take over this airspace." 

Reuters now reports on the significant development which could see the Turkish and Syrian armies enter into direct confrontation: "The Lebanese broadcaster al-Mayadeen said on Sunday the Syrian army would deploy within 48 hours to the town of Kobani which is held by the Kurdish-led Syrian Democratic Forces and the nearby town of Manbij which is controlled by SDF-aligned forces."

"The Syrian Governmental Forces (SAA) are preparing to enter the region of Kobani today, based on an agreement with the Syrian Democratic Forces," Syrian official Mohammed Shaheen, was cited as saying. 

As early as last week the SDF was reportedly engaged in intensifying talks with Damascus over assistance from the Syrian Army, after the US withdrew its air support for the Kurdish-led group amid the Turkish assault. 

On Monday the commander of the US trained and armed SDF, Mazlum Abdi, indicated just that in a bombshell statement: “We are considering a partnership with Syrian President Bashar al-Assad, with the aim of fighting Turkish forces.” 

Though Damascus has yet to confirm an official deal with YPG/SDF forces, state-run SANA did say on Sunday that national forces were moving north to "confront" Turkish forces and its "aggression". 

Military analysis site, The Defense Post, reports on the potential direct cooperation between the Syrian Army and SDF to push out the Turks:

Kobani official General Ismet Sheikh Hasan said that Russian and Syrian government troops could enter Kobani and Manbij by Sunday night to help secure the cities from a Turkish incursion.

“We did everything we could,” he said. “We have called upon the West [and] the Arab Union but no one is coming to help, so we have no one other than ourselves to defend [Kobani]. Kurdish youth should come and defend their homes, and people should not abandon their homes – this is our land. It looks like this is the fate of the Kurds, to go through this each time.”

#BREAKING: Official statement of #Syria Arab Army: Soon, the #SAA will enter #Qamishli, #Manbij & other cities to prevent their fall into hands of #Turkish backed terrorists. They will also confront terrorists in Ras al-Ayn & Tal Abyad.#SAA defends the Kurds against #Erdogan pic.twitter.com/sPtQaJTLsa

— Babak Taghvaee (@BabakTaghvaee) October 13, 2019

Damascus officials had subsequently denied that it was engaged in a wide-ranging deal, however, Sunday's reported development of Syrian Army forces to the north could be the beginning of a more significant deal in the words.

The United States has blocked such talks and cooperation for years, but the White House now appears ready to wash its hands of the matter. 

When the KGB in 1991 tried to reassume control of the crumbling Soviet Union by placing Mikhail Gorbachev under arrest and attempting to seize Moscow, logistics ruled. Boris Yeltsin’s crew drove to the Russian White House in ordinary cars, beating KGB coup plotters who were trying to reach the seat of Russian government in armored vehicles. A key moment came when one of Yeltsin’s men, Alexander Rutskoi – who two years later would himself lead a coup against Yeltsin – prevailed upon a Major in a tank unit to defy KGB orders and turn on the “criminals.”

We have long been spared this madness in America. Our head-counting ceremony was Election Day. We did it once every four years.

That’s all over, in the Trump era.

On Thursday, news broke that two businessmen said to have “peddled supposedly explosive information about corruption involving Hillary Clinton and Joe Biden” were arrested at Dulles airport on “campaign finance violations.” The two figures are alleged to be bagmen bearing “dirt” on Democrats, solicited by Trump and his personal lawyer, Rudy Giuliani.

Lev Parnas and Igor Fruman will be asked to give depositions to impeachment investigators. They’re reportedly going to refuse. Their lawyer John Dowd also says they will “refuse to appear before House Committees investigating President Donald Trump.” Fruman and Parnas meanwhile claim they had real derogatory information about Biden and other politicians, but “the U.S. government had shown little interest in receiving it through official channels.”

For Americans not familiar with the language of the Third World, that’s two contrasting denials of political legitimacy.

The men who are the proxies for Donald Trump and Rudy Giuliani in this story are asserting that “official channels” have been corrupted. The forces backing impeachment, meanwhile, are telling us those same defendants are obstructing a lawful impeachment inquiry.

This latest incident, set against the impeachment mania and the reportedly “expanding” Russiagate investigation of U.S. Attorney John Durham, accelerates our timeline to chaos. We are speeding toward a situation when someone in one of these camps refuses to obey a major decree, arrest order, or court decision, at which point Americans will get to experience the joys of their political futures being decided by phone calls to generals and police chiefs.

My discomfort in the last few years, first with Russiagate and now with Ukrainegate and impeachment, stems from the belief that the people pushing hardest for Trump’s early removal are more dangerous than Trump. Many Americans don’t see this because they’re not used to waking up in a country where you’re not sure who the president will be by nightfall. They don’t understand that this predicament is worse than having a bad president.

The Trump presidency is the first to reveal a full-blown schism between the intelligence community and the White House. Senior figures in the CIA, NSA, FBI and other agencies made an open break from their would-be boss before Trump’s inauguration, commencing a public war of leaks that has not stopped.

The first big shot was fired in early January, 2017, via a CNN.com headline, “Intel chiefs presented Trump with claims of Russian efforts to compromise him.” This tale, about the January 7th presentation of former British spy Christopher Steele’s report to then-President-elect Trump, began as follows:

Classified documents presented last week to President Obama and President-elect Trump included allegations that Russian operatives claim to have compromising personal and financial information about Mr. Trump, multiple US officials with direct knowledge of the briefings tell CNN.

Four intelligence chiefs in the FBI’s James Comey, the CIA’s John Brennan, the NSA’s Mike Rogers, and Director of National Intelligence James Clapper, presented an incoming president with a politically disastrous piece of information, in this case a piece of a private opposition research report.

Among other things because the news dropped at the same time Buzzfeed decided to publish the entire “bombshell” Steele dossier, reporters spent that week obsessing not about the mode of the story’s release, but about the “claims.” In particular, audiences were rapt by allegations that Russians were trying to blackmail Trump with evidence of a golden shower party commissioned on a bed once slept upon by Barack Obama himself.

Twitter exploded. No other news story mattered. For the next two years, the “claims” of compromise and a “continuing” Trump-Russian “exchange” hung over the White House like a sword of Damocles. 

Few were interested in the motives for making this story public. As it turned out, there were two explanations, one that was made public, and one that only came out later. The public justification as outlined in the CNN piece, was to “make the President-elect aware that such allegations involving him [were] circulating among intelligence agencies.”

However, we know from Comey’s January 7, 2017 memo to deputy Andrew McCabe and FBI General Counsel James Baker there was another explanation. Comey wrote:

I said I wasn’t saying this was true, only that I wanted [Trump] to know both that it had been reported and that the reports were in many hands. I said media like CNN had them and were looking for a news hook. I said it was important that we not give them the excuse to write that the FBI has the material or [redacted] and that we were keeping it very close-hold.

Imagine if a similar situation had taken place in January of 2009, involving president-elect Barack Obama. Picture a meeting between Obama and the heads of the CIA, NSA, and FBI, along with the DIA, in which the newly-elected president is presented with a report complied by, say, Judicial Watch, accusing him of links to al-Qaeda. Imagine further that they tell Obama they are presenting him with this information to make him aware of a blackmail threat, and to reassure him they won’t give news agencies a “hook” to publish the news.

Now imagine if that news came out on Fox days later. Imagine further that within a year, one of the four officials became a paid Fox contributor. Democrats would lose their minds in this set of circumstances.

The country mostly did not lose its mind, however, because the episode did not involve a traditionally presidential figure like Obama, nor was it understood to have been directed at the institution of “the White House” in the abstract.

Instead, it was a story about an infamously corrupt individual, Donald Trump, a pussy-grabbing scammer who bragged about using bankruptcy to escape debt and publicly praised Vladimir Putin. Audiences believed the allegations against this person and saw the intelligence/counterintelligence community as acting patriotically, doing their best to keep us informed about a still-breaking investigation of a rogue president.

But a parallel story was ignored. Leaks from the intelligence community most often pertain to foreign policy. The leak of the January, 2017 “meeting” between the four chiefs and Trump – which without question damaged both the presidency and America’s standing abroad – was an unprecedented act of insubordination.

It was also a bold new foray into domestic politics by intelligence agencies that in recent decades began asserting all sorts of frightening new authority. They were kidnapping foreigners, assassinating by drone, conducting paramilitary operations without congressional notice, building an international archipelago of secret prisons, and engaging in mass warrantless surveillance of Americans. We found out in a court case just last week how extensive the illegal domestic surveillance has been, with the FBI engaging in tens of thousands of warrantless searches involving American emails and phone numbers under the guise of combating foreign subversion.

The agencies’ new trick is inserting themselves into domestic politics using leaks and media pressure. The “intel chiefs” meeting was just the first in a series of similar stories, many following the pattern in which a document was created, passed from department from department, and leaked. A sample:

• 
  

  February 14, 2017: “four current and former officials” tell the New York Times the Trump campaign had “repeated contacts” with Russian intelligence.

  
  


• 
  

  March 1, 2017: “Justice Department officials” tell the Washington Post Attorney General Jeff Sessions “spoke twice with Russia’s ambassador” and did not disclose the contacts ahead of his confirmation hearing. 

  
  


• 
  

  March 18, 2017: “people familiar with the matter” tell the Wall Street Journal that former Trump National Security Adviser Michael Flynn failed to disclose a “contact” with a Russian at Cambridge University, an episode that “came to the notice of U.S. intelligence.”

  
  


• 
  

  April 8, 2017, 2017: “law enforcement and other U.S. officials” tell the Washington Post the secret Foreign Intelligence Surveillance Court judge had ruled there was “probable cause” to believe former Trump aide Carter Page was an “agent of a foreign power.” 

  
  


• 
  

  April 13, 2017: a “source close to UK intelligence” tells Luke Harding at The Guardian that the British analog to the NSA, the GCHQ, passed knowledge of “suspicious interactions” between “figures connected to Trump and “known or suspected Russian agents” to Americans as part of a “routine exchange of information.”

  
  


• 
  

  December 17, 2017: “four current and former American and foreign officials” tell the New York Times that during the 2016 campaign, an Australian diplomat named Alexander Downer told “American counterparts” that former Trump aide George Papadopoulos revealed “Russia had political dirt on Hillary Clinton.

  
  


• 
  

  April 13, 2018: “two sources familiar with the matter” tell McClatchy that Special Counsel Robert Mueller’s office has evidence Trump lawyer Michael Cohen was in Prague in 2016, “confirming part of [Steele] dossier.”

  
  


• 
  

  November 27, 2018: a “well-placed source” tells Harding at The Guardian that former Trump campaign manager Paul Manafort met with Julian Assange at the Ecuadorian embassy in London.

  
  


• 
  

  January 19, 2019: “former law enforcement officials and others familiar with the investigation” tell the New York Times the FBI opened an inquiry into the “explosive implications” of whether or not Donald Trump was working on behalf of the Russians.

  
  

To be sure, “people familiar with the matter” leaked a lot of true stories in the last few years, but many were clearly problematic even at the time of release. Moreover, all took place in the context of constant, hounding pressure from media figures, congressional allies like Democrats Adam Schiff and Eric Swalwell, as well as ex-officials who could make use of their own personal public platforms in addition to being unnamed sources in straight news reports. They used commercial news platforms to argue that Trump had committed treason, needed to be removed from office, and preferably also indicted as soon as possible.

A shocking number of these voices were former intelligence officers who joined Clapper in becoming paid news contributors. Op-ed pages and news networks are packed now with ex-spooks editorializing about stories in which they had personal involvement: Michael Morell, Michael Hayden, Asha Rangappa, and Andrew McCabe among many others, including especially all four of the original “intel chiefs”: Clapper, Rogers, Comey, and MSNBC headliner John Brennan.

Russiagate birthed a whole brand of politics, a government-in-exile, which prosecuted its case against Trump via a constant stream of “approved” leaks, partisans in congress, and an increasingly unified and thematically consistent set of commercial news outlets.

These mechanisms have been transplanted now onto the Ukrainegate drama. It’s the same people beating the public drums, with the messaging run out of the same congressional committees, through the same Nadlers, Schiffs, and Swalwells. The same news outlets are on full alert.

The sidelined “intel chiefs” are once again playing central roles in making the public case. Comey says “we may now be at a point” where impeachment is necessary. Brennan, with unintentional irony, says the United States is “no longer a democracy.” Clapper says the Ukraine whistleblower complaint is “one of the most credible” he’s seen.

As a reporter covering the 2015–2016 presidential race, I thought Trump’s campaign was disturbing on many levels, but logical as a news story. He succeeded for class reasons, because of flaws in the media business that gifted him mass amounts of coverage, and because he took cunning advantage of long-simmering frustrations in the electorate. He also clearly catered to racist fears, and to the collapse in trust in institutions like the news media, the Fed, corporations, NATO, and, yes, the intelligence services. In enormous numbers, voters rejected everything they had ever been told about who was and was not qualified for higher office.

Trump’s campaign antagonism toward the military and intelligence world was at best a millimeter thick. Like almost everything else he said as a candidate, it was a gimmick, designed to get votes. That he was insincere and full of it and irresponsible, at first at least, when he attacked the “deep state” and the “fake news media,” doesn’t change the reality of what’s happened since. Even paranoiacs have enemies, and even Donald “Deep State” Trump is a legitimately elected president whose ouster is being actively sought by the intelligence community.

Trump stands accused of using the office of the presidency to advance political aims, in particular pressuring Ukraine to investigate potential campaign rival Joe Biden. He’s guilty, but the issue is how guilty, in comparison to his accusers.

Trump, at least insofar as we know, has not used section 702 of the Foreign Intelligence Surveillance Act to monitor political rivals. He hasn’t deployed human counterintelligence “informants” to follow the likes of Hunter Biden. He hasn’t maneuvered to secure Special Counsel probes of Democrats.

And while Donald Trump conducting foreign policy based on what he sees on Fox and Friends is troubling, it’s not in the same ballpark as CNN, MSNBC, the Washington Post and the New York Times engaging in de facto coverage partnerships with the FBI and CIA to push highly politicized, phony narratives like Russiagate.

Trump’s tinpot Twitter threats and cancellation of White House privileges for dolts like Jim Acosta also don’t begin to compare to the danger posed by Facebook, Google, and Twitter – under pressure from the Senate – organizing with groups like the Atlantic Council to fight “fake news” in the name of preventing the “foment of discord.”

I don’t believe most Americans have thought through what a successful campaign to oust Donald Trump would look like. Most casual news consumers can only think of it in terms of Mike Pence becoming president. The real problem would be the precedent of a de facto intelligence community veto over elections, using the lunatic spookworld brand of politics that has dominated the last three years of anti-Trump agitation.

CIA/FBI-backed impeachment could also be a self-fulfilling prophecy. If Donald Trump thinks he’s going to be jailed upon leaving office, he’ll sooner or later figure out that his only real move is to start acting like the “dictator” MSNBC and CNN keep insisting he is. Why give up the White House and wait to be arrested, when he still has theoretical authority to send Special Forces troops rappelling through the windows of every last Russiagate/Ukrainegate leaker? That would be the endgame in a third world country, and it’s where we’re headed, unless someone calls off this craziness.

Welcome to the Permanent Power Struggle.

The student, who remains unidentified due to laws protecting her privacy, was arrested and charged the day following the incident for threatening a mass shooting, according to the Johnson County District Attorney’s Office. The girl admitted to threatening others, the police have said.

Donchez told USA Today:

“Overnight, some of those students contacted the school administration and expressed their fear of this individual, that based on this incident, they were in genuine fear of this individual.”

The context of the conversation remains unclear but the girl is now living in California, according to the Kansas City Star.

The girl’s grandfather, Jon Cavanaugh, says that she was simply mouthing off. He told the Star:

“I think that this is something that probably could have been handled in the principal’s office and got completely out of hand.”

However, Donchez insists that her classmates had felt legitimately “fearful” of her based on previous encounters, including one incident that was investigated and resulted in her facing some time in juvenile detention.

Dave Smith, a spokesman for the Shawnee Mission School District, told KSHB 41:

“I want to be very clear: The arrest of this student was wholly unrelated to any district policy. It was a municipal police department decision, and our policies don’t impact police department decisions.”

In a statement, police said:

“Ensuring the safety of everyone in a school, or community, is a top priority and requires constant vigilance, parents reminding their children of proper behavior in school and an understanding by the public that each case is thoroughly investigated before any arrest is made and a charge filed.”

On Tuesday, she will appear as a juvenile Tuesday at the District Court of Johnson County.

The girl’s arrest highlights the tense situation at schools across the United States, as well as the region. Just last month at nearby Hocker Grove Middle School, two 13-year-old students showed up to school with real guns stashed in their backpacks.

The children were charged with misdemeanors and the Hocker Grove principal said that no evidence suggested the teens planned to use their guns at school.

However, in the case of the young girl, threatening is a felony. Such charges could haunt her in the future, as felony charges can undermine students’ chances of being accepted into some colleges or the U.S. military.

If convicted, the girl could face a year at a juvenile detention center. Cavanaugh said:

“I’m really worried about my granddaughter’s future.” 

Wow


Dutch National Bank goes 'Big Reset':


'Aandelen, obligaties en ander waardepapier: aan alles zit een risico [..] Als het hele systeem instort, biedt de goudvoorraad een onderpand om opnieuw te beginnen. Goud geeft vertrouwen in de kracht van de balans van de centrale bank'. pic.twitter.com/Oi9n7bnAdi

— willem middelkoop (@wmiddelkoop) October 12, 2019

While gloomy predictions of a monetary reset are hardly new, they have traditionally been relegated to the fringe of mainstream financial thought - after all, as Mario Draghi stated on several occasions in recent years, the mere contemplation of a "doomsday scenario" is enough to create the self-fulfilling prophecy which materializes it. As such, it is stunning to see a mainstream financial institution open up about the superior value of limited supply, non-fiat, sound money assets. It is also hypocritical given the diametrically opposed Keynesian practices regularly engaged in by central banks and official institutions worldwide: after all, just a few months back, the IMF published a paper bashing Germany's adoption of the gold standard in the 1870s as the catalyst for instability in the global monetary system.

Fast forward to today, when the Dutch Central Bank is admitting not only did gold not destabilize the monetary system, but it will be its only savior when everything crashes.

The article, as loosely translated and titled “Goud van DNB” (“Gold from DNB”) states:

"If things go wrong, prices may fall. But, crisis or not, a gold bar always holds value." This makes it the opposite of "shares, bonds and other securities" all of which have inherent risk.

According to the IMF's latest data, the DNB holds 615 tons (15,000 bars) of gold mainly in Amsterdam, with other stores in the U.K. and North America; the value of this gold reserve is over €6 billion ($6.62 billion). Calling gold the “trust anchor,” the article details briefly why the hard asset is so important to wealth building and the global economy, claiming: "Gold is... the trust anchor for the financial system. If the whole system collapses, the gold stock provides a collateral to start over. Gold gives confidence in the power of the central bank's balance sheet."

Why this sudden admission of what goldbugs have been saying for years? Perhaps it has to do with the fact that on October 7, the bank announced it would soon be moving a large part of its gold reserves to "the new DNB Cash Center at military premises in Zeist."

Almost as if the Netherlands is preparing for the grand reset, and is moving its most valuable asset to a "military" installation just for that purpose.

As bitcoin.com tongue-in-cheek points out, "DNB is no stranger to playing along with the Keynesian, inflationary games of the global monetary system. A system which, according to some, is now more a Ponzi scheme based on force and blind faith than sound economic principle. That notwithstanding, the centralized financial powers of the world know the real score, and that’s why hard assets like gold are hoarded and locked down while everyday, individual residents of these geopolitical jurisdictions are encouraged to spend and spend, going further into debt to prop up ultimately unsound national economies."

It is hardly a coincidence that in its preparation for monetary doomsday, the Dutsch Central Bank is also set to begin cracking down on crypto exchanges and wallets, stating that "firms offering services for the exchange between cryptos and regular money, and crypto wallet providers must register with De Nederlandsche Bank."

While the push for greater KYC/AML transparency is a growing global trend, and is hardly surprising in a world in which trillions in assets reside in "tax-evading" offshore jurisdiction, the remarkable aspect of this latest crackdown against crypto - which many see as a modern, more efficient form of "gold" - is the fact that invasive regulations and restrictions by central banks can be seen as yet another means of stockpiling precious assets. This time, not gold bars, but bitcoin and crypto.

As for the timing of the "great monetary reset", which other central banks have already quietly hinted at themselves amid massive repatriation of physical gold from the New York Fed to various European central banks such as Germany and Austria, we are confident that the trust-keepers of the current establishment - such as other central banks and the IMF - will be kind enough to provide ample advance notice to the citizens of the "developed" world to exchange their fiat into hard assets. Or, then again, perhaps not.

At least 750 people with suspected links to Islamic State have reportedly fled a displacement camp in north-east Syria, local officials have said, raising fears that the Turkish offensive against Kurdish forces in the area could lead Isis to regain strength amid the chaos.

Sources said the detainees began to riot and panic after the secure compound came under Turkish shelling, which further resulted in a state of "anarchy" at the camp. 

Authorities say "ISIS sleeper cells" took advantage of the situation to mount a large scale prison break, attacking remaining prison guards who had not already fled to defensive positions amid the shelling. 

Syrian Kurdish authorites say say 249 women and 700 children of the “caliphate” had been held at the Ain Issa camp, and that US forces subsequently evacuated the remainder of the camp's inhabitants to another secure location after the incident.  Reuters, citing a Syrian war monitor, suggested that not all of the some 750 who fled ultimately were able to escape: 

Around 100 people - women affiliated with Islamic State and their children - have escaped from a camp guarded by Syrian Kurdish-led security forces in northern Syria, the Syrian Observatory for Human Rights said.

Images published by the Syrian opposition media outlet SOHR showed ISIS families escaping Ain Issa by running through the nearby countryside.

Ain Issa had a prior population of over 200,000 but has since been emptied of nearly all of its civilian residents. Scores of civilian casualties have resulted from the Turkish offensive, now in its fifth day, which has come under condemnation by almost every country.

Current and former US defense officials have warned of an "ISIS resurgence" amid the US troop draw down and Turkish invasion of the region, especially after SDF leaders warned its fighters can no longer safely guard the thousands of ISIS prisoners in custody. 

Estimates commonly put the number of imprisoned ISIS terrorists in US-SDF custody in the northeast Syria at 11,000.

Further some 70,000 family members believed linked to the former 'caliphate' are being held at the sprawling al-Hol camp, also under threat after internal camp rioting has been reported there. 

Turkey, for its part, has claimed that "YPG/PKK" forces deliberately set the Ain Issa camp on fire, denying Western reports that it came under Turkish shelling.

Meanwhile, the Trump administration has said sanctions on Turkey are "ready to go" as Erdogan has refused to uphold his "responsibilities" related to the operation, which including promises to take custody of ISIS prisoners in the area. Trump has threatened reprisals should Turkey allow even one terrorist to go free. 

According to the report, Bitcoin payments in all 5,200 locations will be feasible through Keplerk’s partner Bimedia, which will provide payment terminals.

As previously reported, Keplerk’s initial launch in January 2019 of the service reportedly involved just six tobacco shops, while other publications reported there were as many as 24 shops participating in the program. At the time, Keplerk co-founder Adil Zakhar stated that the firm was planning to expand the project to 5,200 tobacco shops by February despite the reports that France’s central bank did not endorse the initiative.

Meanwhile, France is apparently seeing a surge in cryptocurrency adoption. In late September, Cointelegraph reported that over 25,000 points-of-sale of 30 French retailers including sportswear giant Decathlon and cosmetics store Sephora will start accepting BTC payments by early 2020. As reported earlier in September, the French unit of Domino's Pizza launched an ordering competition with a prize of $110,000 in Bitcoin or cash.

On Sept. 12, French Economy Minister Bruno Le Maire claimed that French authorities do not plan to tax crypto-to-crypto trades, but rather will consider taxation when crypto is sold for fiat money.

This as President Trump has also announced the US Treasury is "ready to go" with sanctions on Turkey. 

This also comes after a week ago Trump ordered the withdrawal of US troops from northern border posts ahead of a Turkish military incursion to establish a so-called 'safe zone'. That decision has been met with fierce push back among Congressional leaders and pundits, angry at the US "betrayal" of its Syrian Kurdish partners, namely the US-funded and trained Syrian Democratic Forces (SDF). 

In his comments to "Face the Nation," set to air on Sunday, Esper further explained that American forces were now caught between the Turkish assault and the SDF.  

"And so we find ourselves, we have American forces likely caught between two opposing advancing armies, and it's a very untenable situation," Esper said. "So I spoke with the president last night, after discussions with the rest of the national security team, and he directed that we begin a deliberate withdrawal of forces from northern Syria."

WATCH: .@EsperDoD on the planned evacuation of U.S. troopers in northern Syria.

"I spoke with the president last night after discussions with the rest national security team and he directed that we begin a deliberate withdrawal of forces from northern Syria." pic.twitter.com/2Ma0XmypfP

— Face The Nation (@FaceTheNation) October 13, 2019

Following a Friday incident wherein Turkish artillery shells landed near US positions in Kobani, Pentagon officials accused Turkey of deliberately "bracketing" American forces by firing on both sides of the observation post.

While Turkey claimed it was a 'mistake,' US officials said Ankara had known about that specific base for months and that it could have only been intentional. 

Esper said on Sunday that US troops "have the right to self defense and we will execute it if necessary" when asked about the incident and future rules of engagement. 

Meanwhile Trump tweeted early Sunday: “Very smart not to be involved in the intense fighting along the Turkish Border, for a change. Those that mistakenly got us into the Middle East Wars are still pushing to fight. They have no idea what a bad decision they have made. Why are they not asking for a Declaration of War?”

Very smart not to be involved in the intense fighting along the Turkish Border, for a change. Those that mistakenly got us into the Middle East Wars are still pushing to fight. They have no idea what a bad decision they have made. Why are they not asking for a Declaration of War?

— Donald J. Trump (@realDonaldTrump) October 13, 2019

For now it's unlikely that this means all American forces will make a complete exit from Syria.

When pressed on a timeline for the pullback, Esper merely said it would be done "as safely and quickly as possible"; but given US forces appear to be in the line of Turkish artillery fire, a pullback will no doubt come sooner than later — if not occurring already.

Some examples including mining and construction, which are favorable for self-driving vehicles since they are well-controlled locations.

Scania describes the truck as "a step forward to smart transportation systems of the future". And the software in the truck will play just as big of a role as the hardware: the AXL is directed and monitored by an intelligent control environment.

In places like mines, autonomous operations can be facilitated by a logistics system that tells vehicle how it should perform.

Many self-driving autonomous trucks in use today still have a cab where a driver can sit, should the need to intervene arise. The AXL is designed without a cab, meaning no driver will be in the truck. Its combustion engine is even powered by renewable biofuel.

Scania is a major manufacturer of heavy trucks and buses, in addition to diesel engines for heavy vehicles as well as marine and general industrial applications. The company was formed in 1911. 

Few observers seem aware that an economic and systemic crisis will occur at a time when government finances are already precarious. However, the consequences are unthinkable for the authorities, and for this reason it is certain such a downturn will lead to a substantial increase in monetary inflation. The scale of the problem needs to be grasped in order to assess how destructive it will be for government finances and ultimately state-issued currencies.

Listening to recent commentaries about the repo failures in New York leads one to suppose there is insufficient money in the system. This is not the real issue, as the chart below of the fiat money quantity for the dollar clearly shows.

The fiat money quantity is the amount of fiat money (in this case US dollars) both in circulation and held in reserve on the central bank’s balance sheet. Before the Lehman crisis, it grew at a fairly constant compound growth rate of 5.86%. Since the Lehman crisis, it has grown at an average of 9.45%, even after the slowdown in its rate of growth that started in January 2017. FMQ is still $5 trillion above where it would have been today if the massive monetary expansion in the wake of the Lehman crisis had not happened. If there is a shortage of money, it is because the process of debt creation to fund current expenditure is spiralling out of control.

It is not just the US. If we take similar (but less detailed) figures for FMQ in other major nations by adding together broad money M3 and central bank balance sheets, we find that it has increased at varying rates for the most important economies. In China, the compound annual growth rate has been 12%, though the growth in Japan at 5.2% and in the Eurozone at 4.9%. has been more subdued, reflecting stagnant levels of bank credit. When for the lack of any other measure statisticians use a GDP money total as a substitute for defining economic progress, we should not be surprised to see that the economies with the greatest rate of monetary growth are reckoned to be the best performing.

Just as GDP tells us nothing about human progress and its benefits to society, other uses of money as a control mechanism for economic management are equally misleading. Much of the monetary expansion has been to fund unproductive government spending. Most of the balance after the government’s cut has fuelled speculation in the financial sector and has funded consumer credit for those whose savings have been tapped out. Not revealed by the acceleration of money supply growth is the wealth transfer effect which impoverishes every productive individual for the benefit of governments, the banking system and the bank’s favoured customers, who are in the main large corporates and directly or indirectly the hedge funds.

Decades of impoverishment by monetary inflation, which has quickened since Lehman, is a very serious matter and is behind the fragility of economic systems dominated by government spending deficits. The reason there appears to be not enough money is because the acceleration of government liabilities in nominal currency terms is catching up with them. Laurence Kotlikoff’s famous 2012 estimate of the US Government’s future commitments of a net present value of over $222bn is very much alive on arrival.

It would be more accurate to say the figure for the US is trending towards infinity. It is already infinity in Japan and the Eurozone, where negative interest rates and bond yields offer the basis for the net present value calculation. As in most things financial, the public is blissfully unaware of the true implications of low and negative interest rates and ultra-low bond yields. They take the view that very low interest rates permit their government to borrow as much as it likes to provide the public with new hospitals, schools and the like. It is a case of fools of politicians and central bankers having turned everyone else into fools, and the few who realise it have no idea how to reverse the process. What they do not see is the government cannot now fund public healthcare and pensions, which make up the bulk of future obligations in a welfare state, without accelerating monetary debasement even more.

No one can know what the true figure is for future government liabilities, of which welfare is an increasing component. Politicians, who claim that a week in politics is the long term, fail to see any problem. The few governments which have raised retirement ages have done so to deal with escalating current welfare liabilities, not addressing those of the future that will lead ultimately to the destruction of what as Westerners we generally agree is civilised democratic society. That is their successors’ problem.

If history and reasoned economic theory is any guide, the demands for credit by the state will terminate in the destruction of government currencies. For the truth of the matter is inflation of money and credit has created the illusion we can all live beyond our income, our income being what we produce.

Nothing, with the sole exceptions of a central bank and its commercial charges can make money without having to advertise for it: the seigniorage is simply taken without public consent. Without questioning how it arises, the extra money allows us to indulge in all our flights of fancy until at some time reality strikes. Rather like Monty Python’s glutton, Mr Creosote, can we force in a little more inflation before we all explode?

The complaint that the current precarious position faced by major economies is due to a shortage of money is untrue. The problem is one of escalating expenditures, and anyway, the response to any shortage, as we saw recently with problems in the US repo market, is simply to issue more money. But it is no solution, only making the eventual crisis worse.

It is easy to increase the quantity of money, but virtually impossible to increase the quantity of goods to accompany it. For this reason, increases in the quantity of money disadvantage ordinary people, the everyday producers of goods and services in small and medium sized enterprises. And with more money in circulation but the same quantity of goods, the pressure mounts for prices to rise. For a time, consumers can escape price rises by substituting cheaper goods from abroad. This reduces the impact of price rises in the domestic market. Savers are also beneficial for price stability, because they defer their purchases to a future date. But in the absence of savers taking the steam out of inflation-fuelled demand, and contemporary American tariffs on Chinese imports designed to limit them by erasing the price advantage handed to China by America’s monetary inflation, the effect is bound to raise the general level of prices.

Consequently, legacy businesses in America have hoped for a bonanza through not being forced to compete with China. For too long, they have seen the costs of production rise, driven by rising input costs, government regulations, their own expanding bureaucracies, and the natural tendency for expenditure to rise towards the income available. Having been bound hand and foot by red tape they hope that tariffs will protect them from foreign competitors who are not. They maintain their higher uncompetitive prices only to find that consumers, who have not had the benefit of the new free money, are not prepared to pay them or are unable to afford them. Sales volumes suffer and losses begin to accumulate. An international problem provoked by trade protectionism becomes a domestic setback, which is the transition currently hitting the US economy.

We already see the evidence of a developing slump as well in other countries, not directly involved in the trade spat between China and America, but also dependent on the world’s two largest nations measured by trade engaged in their trade war. The member states of the Eurozone are all reporting disappointing internal trade conditions, as are virtually all other nations which report them. The solution, the inflationists say, is more money.

It is a call that has even evolved into a demand that borrowers should be paid to borrow through negative interest rates, killing off the few savers left in the advanced economies. The source for the investment in production deemed necessary to keep the world’s economy from crashing is no longer backed by genuine savings, but by increasing quantities of money conjured out of thin air directly or indirectly by the banking system.

Those that benefit from inflation by expansion of bank credit are those who do not need it, because they are creditworthy and can always raise funds in the market. The problem lies with those who are not creditworthy. No amount of monetary inflation will rescue them, because the banks, in America for instance, have already loaned almost all of the equivalent of their own capital to non-financial borrowers who are deemed to be less than investment grade, in other words junk, both directly and through collateralised loan obligations. In the coming months, or it might even be just a matter of weeks, the banks will protect themselves by turning from providers of liquidity to withdrawing it. Inevitably, a volte-face on credit by the banks will bring on the slump. A systemic crisis will then ensue, and central banks will be forced to ride to the rescue by printing yet more money.

As we saw following the Lehman crisis, the money will be printed to bolster banks’ reserves in return for government debt accumulating at the central bank, so most of that newly printed money ends up covering the government’s deficit through the purchase of government bonds by the central bank.

A credit cycle will have completed: the post-Lehman stabilisation, followed by an uncertain recovery, then a return to normality. Normality matures into complacency, with bank credit being expanded in favour of increasingly risky borrowers. The post-credit expansion crash, mirroring Lehman, is now in the making.

It is a repetitive cycle, the consequence of earlier monetary interventions by the central banks. They have been unable to stop themselves. The decision to pull the plug on Lehman, only a second-rank investment bank, nearly brought down the entire global financial system. No central bank can take that risk again. We can be certain the solution to the next credit crisis will be a further acceleration of the production of money and credit with no one in the financial system being allowed to fail. And the expansion of base money directed at bolstering the banks’ balances will predominantly favour the one borrower class left with any financial standing, the governments.

But what we see is two forces joining together to accelerate the demise of state-issued currencies, which at the end of the day are only backed by the faith and credit the public holds in their governments’ finances. The upcoming credit crunch will occur against a background of a rapidly increasing burden of welfare liabilities, so dramatically identified by Laurence Kotlikoff seven years ago, and likely to have increased markedly from his alarming estimate.

Inevitably, the prolonged suppression of government bond yields will begin to end, and irrespective of central bank interest rate policies, they will rise as investors realise that adjusted for a more realistic estimate of price inflation than that provided by government statisticians, they are a costly safe haven. Then, government finances will become so visibly out of control that even modern monetary theorists will return to their textbooks to see which bit they failed to understand.

Today, the public is blissfully unaware of the inexorable trend of monetary debasement while enjoying the continuing benefits of government welfare. Government economists tell them that moderately rising prices, the consequence and justification for expanding the quantity of money and credit, are good for them. And who are they to question the experts?

Fortunately, people pursuing their daily lives usually adapt to the circumstances forced upon them by governments. A targeted two per cent inflation rate of prices is not overtly disruptive, and government statisticians have become skilled at goal-seeking price inflation figures. Everyone’s experience of price inflation is different, so government figures become believable by default. But for some considerable time, increases in peoples’ wages have badly lagged the price rises of their normal purchases, which bear little relation to the composition of governments’ consumer price statistics. Coupled with the financial freedom afforded to them to borrow, they have made up the difference between income and expenditure just like any modern government: by borrowing with little or no intention of repaying.

The cause of the problem people face is the continual destruction of their personal wealth by monetary inflation. It has led to a fundamental difference between the credit cycle today and those earlier described in the textbooks of the Austrian School of economists. Before Keynesianism took hold, investment in production was funded by savings. Those savings have been substantially destroyed. Instead of savings being a cushion against uncertainty, for practical purposes they no longer exist.

There are two consequences that concern us here. The first is that the burden of investment and its continuity now falls entirely on the state and its licenced banks, whose only recourse is yet more monetary expansion. The second is the almost total reliance today’s wage earners place on receiving their monthly salary to survive, with a reported 78% of US workers living pay-check to pay-check. British workers are similarly strapped. They have no means of surviving a credit crisis and the economic consequences that follow. That will be another cost that falls to the government and its central bank to add to already escalating welfare commitments.

It is becoming easy to envision the day that the majority of government spending is financed by inflation and inflationary borrowing, through a combination of falling tax revenues and escalating spending commitments. There is also an imbalance between taxpayers, with a mobile wealthy class bearing the bulk of national tax burdens who can up sticks at any time. The question then arises as to how financial markets will react when the triple conjunction of a credit crisis, sharply increased government deficits, and the long-term escalation of welfare costs, materialise in the public consciousness all at the same time.

Ahead of the next credit crisis, the knowledge that things are not quite right has so far led to a flight to perceived safety: in some countries, investors are even paying to own their government’s debt. In the US, the yield on the 10-year US Treasury bond has declined from 3.2% a year ago to 1.4% today.

As the next credit crisis materialises, perceptions of investment risk are bound to change radically. The imperative to print money at an even faster rate will accompany the trend towards deeper negative interest rates, penalising bank deposits, eliminating residual savers from the system. Consequently, if the Fed makes the mistake of even considering negative interest rates, it will put the whole commodity complex firmly into backwardation from the money side because all commodities are priced in dollars.

We can take anticipation of lower and more widespread negative rates as guaranteed when the credit cycle enters its crisis stage. Last time, everyone was so relieved that life after Lehman’s death continued that they still regarded government debt as the risk-free yardstick for financial investment. It would be foolish for a central bank to think this trick could be pulled a second time. Just imagine how high the fiat money quantity in our introductory chart would be above that long-term pre-Lehman trend line. And just think of the damage to the purchasing power of the dollar and the other major fiat currencies from interest rate policies that are bound to drive deposits towards widespread encashment.

This time, the coincidence of a credit crisis and rapidly escalating short- and long-term welfare commitments adds a new dimension to the inflation story. Far from rescuing the global economy, the spreading of zero and negative interest rates can be expected to expose the true worth of fiat currencies. Next time is different in another respect: there is a new generation of educated men and women who through cryptocurrencies have learned of the fiat currency fallacy ahead of the event. In the past, nearly everyone learned of it too late. Now, around the world, particularly in America and China millennials could accelerate the ending of fiat money by triggering an early shift out of fiat into cryptos. Bitcoin at a million dollars becomes no longer pure fancy, only don’t forget that a million dollars might not buy you much.

It is not an expected outcome, except by the very few who understand what is happening to money and the built-in escalation of its quantity. These will include growing numbers in the cryptocurrency community and the few who have studied the subject away from the influence of macroeconomists. Hopefully, they will now include readers of this article.

As the credit crisis drives monetary expansion into overdrive or leads into a hyperinflationary slump, people are bound to begin to discard their national currencies in favour of any goods they think they might need in future. Minimal cash liquidity becomes the desired position. It can rapidly lead into the final short-lived boom that marks the death of an unbacked fiat currency, when it dawns on the general public that their government’s currency might be worthless. As the conviction of it grows, the pace at which it is dumped for anything of use that they can get their hands on increases exponentially. In Germany, it lasted from about May 1923 until the following November when the mark finally expired.

It has long been a theme of survivalist libertarians that this will occur.

So long as the alternative of owning physical gold and silver exists, it is not necessary to stockpile necessities, unless, that is, disruptions to supplies are anticipated. In a slump, the prices of goods will decline measured in sound money. This, after all, was firmly impressed upon Keynesian inflationists by the experience of the early 1930s, when measured in gold substitutes prices of nearly everything fell heavily. When gold and silver became more desirable relative to owning goods, their purchasing power increases while that of fiat currencies declines.

Putting supply considerations to one side, if in the wake of the next credit crisis the economic conditions of the 1930s return, those that use gold and silver as money will see the prices of their consumer staples fall, so there should be no hurry to hoard them.