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Hidden Bankruptcy: The Reality Behind Uncle Sam’s Inflated Bar Tab

Hidden Bankruptcy: The Reality Behind Uncle Sam’s Inflated Bar Tab

Authored by Matthew Piepenburg via GoldSwitzerland.com,

Below, we look…

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This article was originally published by Zero Hedge

Hidden Bankruptcy: The Reality Behind Uncle Sam’s Inflated Bar Tab

Authored by Matthew Piepenburg via GoldSwitzerland.com,

Below, we look at The hidden bankruptcy of the US in the wake of even more inflationary forces confirmed by cost-of-living-adjustments, Uncle Sam’s interest expenses, objectively unloved Treasuries and a roaring as well as convenient COVID narrative.

Math vs. Double-Speak

Given the fact that just about everything coming out of the mouths of debt-cornered policy makers requires a lie-detector and “double-speak” translator, we’ve been arguing since the moment the Fed began peddling the “transitory inflation” meme/myth to think differently.

In short: It’s our view that inflation is a snowball growing, not melting.

Toward this end, we’ve written and spoken at length as often as we can as to the many converging forces pointing toward rising inflation—from increased governmental guarantees (controls) over commercial bank loans, commodity super cycles to just plain economic realism, as inflation (and hence currency debasement) is the only tool left (beyond bankruptcy, taxation and “growth”) to service otherwise unsustainable debt levels: A hidden bankruptcy.

But let us not stop there, as other inflationary storm clouds are on the horizon yet ignored (not surprisingly) by an increasingly clueless financial media.

Another Glaringly-Ignored Inflation Indicator—COLA 2.2022

In particular, we are thinking about the U.S. Cost of Living Adjustment (“COLA”) for 2022 which could easily reach 6%, the highest of its kind since 1982.

It would seem that the U.S. Social Security Administration, unlike Powell, is aware of inflation, and therefore preparing (i.e., “adjusting”) for the same.

As the price for entitlement obligations rises, so too will the level of money printing to pay for the same, a veritable vicious circle for rising inflation.

Then there’s simple math.

We’ve talked about the Realpolitik of negative real rates as the final and desperate way for debt-soaked sovereigns to service their debt.

The signs of this are literally everywhere.

If we take, for example, a 1.4% Treasury Yield and subtract a potential 6% COLA increase for Social Security, we get -4.6% real rates, which will be a boon for alternative stores of value like gold and silver or “currencies” like BTC (as well as farmland and high-end real estate, which is continuing to enjoy a debt-jubilee of negative 3% real (i.e., “free” mortgages).

The necessary evil of negative real rates also speaks to the ongoing taper debate…

Giving Clarity to the Taper Debate

As tweets by twits pour across the electronic universe, it’s often important to notice what is not being “tweeted,” such as the interest expense on Uncle Sam’s national bar tab.

As the financial world hangs on the edge of its seat to see if the Fed will taper its QE (i.e., money printing) program and send bonds (and stocks) to the floor and rates toward the sky, they’ve ignored some basic math and a key chart.

Specifically, we are referring to the chart below representing the true interest expense on the debt bar-tab of a now fully debt-intoxicated Uncle Sam:

With central-bank “accommodated” asset bubbles (from stocks to real estate to art) now at historically unprecedented levels, tax receipts flowing into the U.S. coffers from the ever-growing millionaire-to-billionaire class have been rising.

This may seem good for that punch-drunk Uncle Sam, but what no one is talking about is that despite even those “capital gain” receipts, the interest expense (i.e., “bar tab”) in D.C. is now an astronomical 111% of those same tax receipts.

In other words, U.S. tax income doesn’t come close to even paying interest (let alone that archaic concept known as “principal”) on growing U.S. debt obligations.

Can anyone say, “Uh-oh?”

Given the stark but ignored reality of unpayable U.S. debt, the implications going forward are fairly clear.

First, the Fed will not be able to “taper,” as less QE will mean an even higher interest rate, and thus higher interest expense on debt it still can’t pay at today’s artificially low rates.

Stated otherwise, a “taper” would only add helicopters of gasoline to a debt fire that is already burning the Divided States of America.

Given the dangers of such a taper, it likely won’t happen because it can’t happen, and this means more money printing and hence more negative real rates creating a hidden bankruptcy ahead, a weaker USD and rising precious metal prices, among others.

But What If the Fed Tapers?

Alternatively, should the Fed somehow turn hawkish and taper its QE support in the face of a debt forest fire, Treasuries will sell off dramatically, rates will rise, markets will tank, and the USD will surge—not good for Gold, BTC or just about anything else.

Does it Matter?

But as we’ve also tried to make crystal clear, there is no way the Fed will taper QE liquidity before it sets up a back-channel for even more liquidity from the Standing Repo Facility, Reverse Repo Facility and FIMA swap lines, which are all just “QE” by other names.

In simple speak, therefore, the “taper debate” is no debate, as the Fed has many liquidity tricks up its greasy sleeves.

In addition to liquidity tricks, the Fed has some ugly bonds to buy.

Embarrassing Treasuries

As we’ve said so many times, the biggest issue today is unsustainable and embarrassing debt levels requiring inflation (hidden bankruptcy), compliments of policy makers rather than a viral pandemic narrative out of all proportion to its confused scientific truths.

COVID has been an all-too timely and convenient pretext for blaming global debt ($300T) or U.S. public debt ($28.5T) on a flu rather than a sordid history of grotesque mismanagement from politico’s and bankers that was in play long before the first headlines out of Wuhan.

Furthermore, COVID monetary and fiscal policy measures effectively became a (hidden) pretext for a second market bailout greater in scope (yet better in optics) than the post-Lehman bailout of those otherwise Too Big to Fail banks.

In short, the façade (and branding) of a humanitarian crisis allowed a market-saving liquidity rescue (Bailout 2.0) to an otherwise Dead-on-Arrival bond market in late 2019.

In case this sounds too controversial to consider, please follow the Treasury market rather than our bemused nouns and adjectives, not to mention our total lack of scientific/medical credentials.

Bad IOUs

Just like friends don’t accept IOUs from drug addicts, global investors heading into 2020 stopped buying Uncle Sam’s Treasuries.

In simple-speak, Uncle Sam just seemed too debt-drunk to trust.

As a result, his Treasury bonds, once seen as “safe havens,” were finally seen as “bad jokes”—akin to the paper coming out of equally discredited zip codes like Greece, Italy or Spain.

For this reason, foreigners in a nervous 2020 (unlike a broken 2009) had not only stopped buying U.S. Treasuries, they were selling them.

Yep.

Months ago, smart voices from the Street, including Stan Druckenmiller, were warning about the implications of such a shift in financial consciousness/trust.

Druckenmiller’s Astonishment

Specifically, Druckenmiller spoke of something he’d never seen in over 40 years as a market veteran.

That is, as stocks were tanking in the spring of 2020, he also saw the bond market lose 18 points in one day.

This correlated fall in stocks and bonds was not, as everyone “tweeted,” a reaction to the fiscal profligacy of the CARES Act, but more sadly a very new trend by foreigners to get rid of increasingly discredited U.S. IOUs.

Folks, this is a critical shift.

For over two decades (including during the Great Financial Crisis of 2009), U.S. Treasuries (and the USD) were once seen as “safe” landing places for foreign money rather than a risky bet.

Now, instead of seeing an annual average $500B inflow into U.S. bonds, we are seeing annual outflows of $500B…

When you tack on a $700B current account deficit in D.C. to a net loss of $1 trillion in Treasury support, whose left to “fill the gap” and buy those unwanted IOU’s?

You guessed it: The Fed.

And how will they come up the money to cover these purchases?

You guessed it again: They’ll mouse-click that “money” out of thin air to create a stealthy, hidden bankruptcy.

Needless to say, such realism (i.e., objective math) puts a lot of pressure on the U.S. Dollar as the Fed is forced to create even more money at a record pace to buy otherwise unwanted Treasuries.

But what kept the USD from falling in favor by end of 2020, if no one was buying our bonds but the Fed?

Well, the short answer is that all that foreign money (from sovereign wealth funds and foreign central banks) once ear-marked for our once-credible U.S. Treasury bonds went instead into those massive U.S. digital transformation companies who benefited most from a locked-down new mad world, namely GOOG, ZOOM and MSFT etc.

And how did Druckenmiller describe this shift?

Simple. He called it a “raging new mania.”

From Mania to Desperate

Foreign money once reserved for “safe haven” bonds was (and is) pouring into an already over-sized equity bubble.

By July, the USD had peaked, but after a peak comes, well…a fall for the Greenback—all very good for commodities, real estate, growth tech stocks and, of course, precious metals.

Back to the “What If” of a Naked Taper

But (and this is a very big “but”), what if the Fed were insane enough to taper QE without any back-door liquidity from foreign swap lines and the repo programs?

Again, ugly Treasuries would get even uglier, tank in price, sending rates and the USD higher and gold lower, along with a sharp sell-off in risk assets—i.e., corporate stocks and bonds.

But again, we don’t think this will happen, because as desperate as central bankers are, they are equally predictable.

Predictable Behavior?

That is, they know that such a naked taper (i.e., a taper without a back door repo or swap-induced liquidity) would cause rates to spike, and hence Uncle Sam’s bar-tab to default.

As the Fed’s Vice Chair intimated last year, US Treasuries (Uncle Sam’s bar tab) are simply too big to fail.

This means we can expect more liquidity (QE or repo/swap) and hence more, not less inflation.

The Fed is stuck in a self-inflicted dilemma–between letting inflation rip (to partially service America’s bar tab and “declaring” a hidden bankruptcy) or watching markets sink to the bottom of time.

For now, which choice do you think these banking, pro-market cabal thinkers will make?

The Realpolitik of COVID

Meanwhile, and regardless of one’s views on the vaccine mandates, case fatality rates vs. infection rates, or mask wearing vs. mask annoyance, no one needs our amateur medical advice.

But looking at COVID as a policy tool rather than as controversial health issue, it’s also fairly clear that the powers that be will be milking this fear-porn-to-policy trick for all its worth for as long as its worth.

Why?

Again, COVID is a wonderful narrative to justify more debt and more instant liquidity (i.e., fiat monetary expansion) and hence more inflation to inflate away the debt of debt-drunk nations already fatally in debt pre-COVID.

Rightly or wrongly, there are already scientists out of the UK (namely Oxford vaccine creator Sarah Gilbert) with more IQ-power and credibility than Fauci or Fergusson (admittedly not a high bar), who are already signaling that COVID will resemble little more than a common cold by next year.

This, if true (and no one really knows anyway), would be good for the world—but would the policy makers like this?

A post-COVID normal would be a boon to commerce and economic activity, and hence a boon to the velocity of money, which would kick inflation into ultra-high-gear.

High inflation will mean higher rates, which scare debt-soaked politicians and central bankers, unless inflation rises higher than those rates and negative real yields become the norm, which, again, we think is the realistic (i.e., only option) for these financial magicians running our governments, lives and central banks.

In such a scenario, gold will smile upon the inflation to come.

In short, and however we look at it, inflation is the new norm, and negative real rates are no less so, regardless of how the taper or COVID debate plays out.

As the future unfolds, gold, whose price is waiting for confirmation of such inflation, will only grow stronger as the “transitory” meme gets weaker by the day.

Tyler Durden
Tue, 10/05/2021 – 21:25
















Author: Tyler Durden

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Peppermint delivers key milestones in the last quarter, including the launch of micro-loan platform bizmoPay

Special Report: Peppermint has had another significant quarter, delivering on all key metrics which was highlighted by the launching of … Read More
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Peppermint has had another significant quarter, delivering on all key metrics which was highlighted by the launching of bizmoPay.

Fintech company Peppermint Innovation (ASX:PIL) has had a very productive quarter, with the highlight being the delivery of its alternative non-bank micro-enterprise loan offering, bizmoPay.

In July, the company achieved a significant milestone after being awarded a financial lending licence for bizmoPay by the Philippines Securities Exchange Commission (SEC).

Following that approval, PIL immediately commenced a three-month pilot program for a select number of bizmoto agents to test out the bizmoPay platform.

The aim was to identify and optimise any friction points or blockages to ensure efficient  system operations before it started offering the loan program to more than 56,000 registered bizmoto agents.

The pilot program has rapidly expanded in the last two weeks of September to more than 150 bizmoto agents.

“Having initiated a select 10-agent pilot program to identify friction points in our bizmoPay system, we rapidly expanded the size of the pilot due to the level of interest shown by other bizmoto agents,” commented Peppermint CEO, Chris Kain.

Kain said the pilot program was so in demand that by October 12, PIL had issued 359 loans across its three different loan products – Platinum Plus, Platinum and Silver.

During the quarter, PIL also recorded cash receipts of $472,000, which was an 83% increase on the previous quarter.

The company is well funded, with a strong cash position in the bank of $2.7m at quarter end.

 

BizmoPay

The granting of a financial lending licence by the Philippines SEC allows bizmoPay to offer alternative non-bank micro-enterprise loans to qualified bizmoto agents, registered bizmoto network members, and enterprise platform partners.

bizmoPay services fully complement the commercialisation of Peppermint’s proprietary technology platform which targets four key business sectors – mobile payments, ecommerce, delivery and logistics and mobile financial services.

Based on data analysis from the first 45 days of the bizmoPay pilot program, loan recipients on average increased their transactional volume by approximately eight times across the bizmoto ecosystem of services.

“We’re starting to get a picture of an overall positive impact on the agents’ ability to conduct transactions across the platform, which is exactly what we wanted to do,” Kain told Stockhead.

And of course, the more transactions across the platform, the greater revenue that the company earns.

The bizmoPay pilot program started with only the Platinum Plus and Platinum loan products, with the shorter term and lower value Silver bizmoPay loan product commencing trials in the last week of September.

As such, no meaningful data were able to be collected for the Silver bizmoPay loan type.

The program yielded significantly different results in terms of transactional volumes and values across the first 45 days.

On average across the board, the total number of bizmoPay loan recipients completed 13 transactions during the first 45 days of the bizmoPay pilot program, and processed $1.05 per day in transactional value.

“That volume of transactions would represent an additional $22 million per annum in revenue if extrapolated across our 56,000 registered bizmoto agents,” said Kain.

“We’re also on schedule to deploy the next phase of our commercial roll-out for bizmoPay next month, whereby recipients will be able to apply for their micro-enterprise loans via their mobile app.”

Several agents significantly outperformed the average transactional volume during the first 45-day pilot period, including 20 agents who performed more than 50 transactions.

At the higher end, five agents completed more than 100 transactions, while one agent undertook more than 250 transactions.

Peppermint expects to expand bizmoPay’s agents to more than 56,000 users when the pilot is completed, with a target of $30m in micro loans over the next three years.

The graph below is an extrapolation of what the different average performance of each loan type would yield if applied across selected numbers of the registered bizmoto agent base over the same initial 45 day period of the bizmoPay pilot program:

Kain expects this simple and easy to use feature will be incredibly popular with many of its bizmoto agents.

The non-bank lending space in the Philippines is currently undergoing massive changes, especially in the mobile app space where users have exploded as more people access non-bank loan finance through their mobiles.

To capitalise on this momentum, Kain said the next level of regulatory licensing that Peppermint would be chasing is an Electronic Money Issuer (EMI) licence.

With an EMI  licence in place, he believes that Peppermint could turbocharge its capabilities in the digital transaction space.

“An EMI licence will allow us to facilitate any e-money transaction and service open-loop e-wallet accounts, providing all Filipinos – not just bizmoto agents – with a convenient and secure way to receive digital money and access digital services,” Kain said.

“Every Filipino will have the chance to receive a bizmoPay loan, paid to their bizmoto e-wallet to access the bizmoto ecosystem and agent services. We believe this will stimulate significant transaction volumes over the bizmoto platform.”

In February, the company told the market that its phase 2 objective was the launch of bizmoPay.

“We’ve done that and ticked that box, so now we’re moving to phase 3, an EMI licence which is Peppermint’s next objective in delivering financial inclusion to the Filipino people.”

 

Other significant milestones

In March, PIL signed an API agreement with the Bank of the Philippine Islands, which saw PIL’s proprietary bizmoto platform integrated into the bank’s operating systems.

The integration will begin during Q4 2021, with the product expected to go live later in 2021 or early 2022.

PIL’s strategic Merchant Biller Agreement  with Cebuana Lhuillier back in April allowed its bizmoto agents to cash in money and top up their mobile wallets at any of the 2,500 Cebuana shop fronts across the country.

The API that serves as the gateway for Cebuana Lhuillier to send funds has now been developed, with a projected go-live date later this year or early Q1 2022.

Integration of the bizmoto platform with GCash as a payments facilitator is also underway, and expected to be launched in December.

Once the GCash offer is live, bizmoto agents, riders and merchants will have exposure to approximately 46 million registered GCash users throughout the Philippines.

PIL’s bizmoTinda website meanwhile, has been improved to include multi-vendor customer and multi-vendor merchant functionality, allowing  users to register as multiple vendors or multiple merchants.

The bizmoTinda allows users to sell their own items, with the convenience of having their own website.

Other milestones during the quarter include launching a blog newsroom with the aim of providing non-ASX sensitive information and news updates about the company’s activities to shareholders.

PIL also executed a direct marketing campaign around bizmoPay during the quarter, introducing the concept of a “Planet bizmoto” community among its agents.

The primary objectives of the “Planet bizmoto” community are to experience unique value, be loyal to the brand and transact frequently within the bizmoto ecosystem.

This article was developed in collaboration with Peppermint, a Stockhead advertiser at the time of publishing.

This article does not constitute financial product advice. You should consider obtaining independent advice before making any financial decisions.

The post Peppermint delivers key milestones in the last quarter, including the launch of micro-loan platform bizmoPay appeared first on Stockhead.



Author: Special Report

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Lefroy Exploration secures major nickel frontier land package in WA

Special report: In line with its multi-commodity gold and base metals strategy, Lefroy Exploration has pegged five exploration licence applications ……

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In line with its multi-commodity gold and base metals strategy, Lefroy Exploration has pegged five exploration licence applications over a new nickel project named Glenayle.

The Glenayle Project covers a massive contiguous 2735sqkm of the Proterozoic age Salvation Basin that is intruded by multiple dolerite sills which extend over the entire land package.

These dolerite sills are part of the Warakurna Large Igneous Province (LIP), which extends west to the Bangemall Basin and east to include the Giles layered intrusive complex. More importantly, they are considered prospective for nickel mineralisation.

Glenayle represents a first mover approach by Lefroy (ASX:LEX) into a frontier nickel-copper exploration project with its stake over the Warakurna LIP.

New wholly owned subsidiary to list on ASX in 2022

The Glenayle tenement package is held by a new wholly owned LEX subsidiary, Johnston Lakes Nickel (JLN), which Lefroy aims to list on the ASX in 2022 subject to shareholder and regulatory approvals.

JLN will also hold other nickel assets currently held by LEX at Lake Johnston and at Carnilya South in the Lefroy Gold Project.

The company expects the tenements to be granted in Q4, 2022.

While the explorer aims to expand its portfolio in search for nickel, the focus remains on exploration at Eastern Lefroy and the Burns gold-copper prospect.

A rare opportunity

LEX managing director Wade Johnson said it is not often that an opportunity like this presents itself.

“It is a monster land package,” he said.

“We have taken the first mover approach into a new area that has seen very little exploration.

“We are very keen to further develop and apply knowledge learned about nickel mineralisation in large igneous provinces that will provide exploration targeting criteria for target selection,” he said.

“Glenayle adds another wholly owned project to the LEX greenfields exploration portfolio and complements our other nickel assets at Lake Johnston and Carnilya South.”

The Glenayle project relative to the other company projects and key geological rock units in Western Australia. Pic: Supplied

Identified in desktop assessment

The Glenayle nickel project was identified after a desktop assessment to identify new areas in Western Australia considered prospective for nickel mineralisation.

Prior geological knowledge of the area from a field reconnaissance trip in 1998 by Wade Johnson and the subsequent review of the research paper by Pirajno and Hoatson (2012) supported LEX’s acquisition.

What’s next?

Lefroy has kicked off compilation and assessment of previous surface geochemistry, geophysical and drilling data from WAMEX at Glenayle.

The location of drill core from the only three diamond holes drilled at Glenayle is being sourced, with two of the three holes being located.

Geophysics, and in particular interpretation of gravity survey data, will play a key role in guiding exploration targeting within the project.

Development of a detailed aeromagnetic and gravity dataset is underway and will be the primary exploration tool in the interpretation of the distribution of the mafic rocks such as feeder sills, layered intrusions and dykes within the Salvation Basin.

This will then be followed by targeted stratigraphic diamond drilling in 2023.

The company will apply for funding support through the WA State Governments Exploration Incentive Scheme (EIS) for this drilling where applicable.

LEX has also commenced land access negotiations with the determined Native Title group.

 


 

 

This article was developed in collaboration with Lefroy Exploration, a Stockhead advertiser at the time of publishing.

 

This article does not constitute financial product advice. You should consider obtaining independent advice before making any financial decisions.

The post Lefroy Exploration secures major nickel frontier land package in WA appeared first on Stockhead.





Author: Special Report

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Silver Mines sets the stage for maiden underground silver resource at Bowdens

Special Report: Silver Mines’ aggressive drilling campaign at its Bowdens project in New South Wales has delivered more high-grade silver … Read More
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Silver Mines’ aggressive drilling campaign at its Bowdens project in New South Wales has delivered more high-grade silver hits, further building the case for a significant underground resource.  

Silver Mines’ (ASX:SVL) Bowdens project is already the largest undeveloped silver deposit in Australia, but continued high-grade results are providing strong evidence the mine will be more than just an open pit.

Four drill rigs are going full throttle as part of the expanded 30,000m drilling program, which has produced additional high-grade hits like 3m at an impressive 679 grams per tonne (g/t) silver equivalent from 306m, 6m at 382g/t silver equivalent and 14m at 264g/t silver equivalent from 322m from the Northwest and Aegean zones.

Drilling of the Bundarra Zone returned a notable intercept of 3m at 278g/t (44g/t silver, 3.18% zinc, 1.92% lead and  0.15g/t gold, from 255m.

Meanwhile, Southern pit extensions included 9.8m at 214g/t silver equivalent including 0.31g/t gold, from 39m; and 4m at 343g/t silver equivalent, with a higher grade 1.94g/t of gold, from 88m.

The Aegean to Northwest Zone is dominated by high-grade silver vein systems comprising substantial widths, while the Bundarra Zone is dominated by wide zinc, lead and gold bearing veins with appreciable silver.

“We are very pleased with these latest results; they confirm infill and extensions to these three new deposits which lie directly beneath the open-cut development plan,” Managing Director Anthony McClure told Stockhead.

“These results will feed into our maiden underground mineral resource which will be complete in the coming months.”

Silver Mines is in the final stages of development approval for a 2-million-tonne-per-annum open pit operation that would have an initial mine life of 16.5 years producing about 66 million ounces of silver, 130,000 tonnes of zinc and 95,000 tonnes of lead.

The drilling results so far have given Silver Mines the confidence to move forward not only with an initial underground resource at Bowdens, but also to concurrently move forward with a Scoping Study for a potential underground develoment.

The study will consider a couple of alternatives including the potential for underground development to start in years 3-4 of the open pit development to supplement plant feed with high-grade material at a rate of up to 500,000 tonnes per year.

Drilling below the open pit continues to extend the Northwest High-Grade Zone closer to the Aegean Zone, cementing Silver Mines’ belief these two zones are linked.

The Northwest Zone starts about 30m below the base of the proposed open pit and so far, is up to 20m thick, extending over 450m and continuing down plunge for at least 300m. But it’s not closed off, meaning Silver Mines hasn’t yet hit the edges of this potentially very big system.

Drilling targeting resources beneath the current open pit reserve is expected to run through until at least the end of this year, while drilling to test for system extensions to the Bowdens deposit will continue into 2022.

 


 

 

This article was developed in collaboration with Silver Mines, a Stockhead advertiser at the time of publishing.

 

This article does not constitute financial product advice. You should consider obtaining independent advice before making any financial decisions.

The post Silver Mines sets the stage for maiden underground silver resource at Bowdens appeared first on Stockhead.




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