Study Guide: Japan, meltdowns, and the debt

Glenn spent the first fifteen minutes talking about the way the nuclear reactor works in Japan. Want to read more (and possibly get a better understanding than Glenn's M&M demonstration)? Read this form Business Insider

And here's some information on Pimco dumping US Debt:

Charles Payne, Fox Business Network

  • A lot of people have voiced concern about bonds even before PIMCO so others will follow
  • The BOJ is pumping $180 billion into Japanese economy that will keep Yen under pressure by the same token serious demand for funds to rebuild are going to pressure the Yen higher but probably means Japan will be loath to sell US Treasuries because it doesn’t want the dollar to weaken
  • Don’t think there will be an impact beyond Japan with respect to the Yen but I’m watching food commodities. Japan is a major importer of corn (#1) and other food commodities like wheat and there will be so damage to their ability to farm these items...other than that our imports from Japan peaked in 2006 and our exports have been flat…yes, they are still in the $60.0 billion neighborhood but in critical areas that are unlikely to change significantly and not long term
  • Japan has the most debt in the world…no natural resources and has flooded its economy with money so it would be the most vulnerable to hyperinflation of any country on the planet. Just not sure how long it would take…not completely sure on how it impacts US but could force Japan to sell treasuries and that might force the Fed to go with QE3 and continue to lower the dollar and swell it is balance sheet

Steve Moore, Wall Street Journal

  • Pimco is dumping US bonds because the interest rates are way too low given the high rates of potential inflation and higher interest rates to come.
  • No one should buy treasuries now at these low interest rates. The big bubble is in the bond market
  • The Yen is falling as the Japan economy gets creamed by the earthquake.  The dollar will strengthen in short term but stocks will fall.
  • Impact of the earthquake is negative as Japan rebuilds and trade with Japan is curtailed.
  • I don’t see hyper inflation in Japan – we are get greater risk of that than they are – though they have a large debt too.

(Bloomberg, March 9, 2011) Pimco’s Gross Eliminates Government Debt From Total Return Fund

  • Bill Gross, who runs the world’s biggest bond fund at Pacific Investment Management Co., eliminated government-related debt from his flagship fund last month as the U.S. projected record budget deficits.
  • Pimco’s $237 billion Total Return Fund last held zero government-related debt in January 2009. Gross had cut the holdings to 12 percent of assets in January, according to the Newport Beach, California-based company’s website. The fund’s net cash-and-equivalent position surged from 5 percent to 23 percent in February, the highest since May 2008.
  • Yields on Treasuries may be too low to sustain demand for U.S. government debt as the Federal Reserve approaches the end of its second round of quantitative easing, Gross wrote in a monthly investment outlook posted on Pimco’s website on March 2. Gross mentioned that Pimco may be a buyer of Treasuries if yields rise to attractive levels.

(Marketwatch, March 14, 2011) Yen retreats as Bank of Japan adds stimulus

http://www.marketwatch.com/story/japan-yen-falls-back-as-stocks-slump-after-quake-2011-03-13

  • LONDON (MarketWatch) — The yen retreated versus major rivals in choppy trade on Monday, as the Bank of Japan provided a massive dose of liquidity and voted to further loosen its monetary policy in the wake of last week’s devastating earthquake and tsunami.
  • The central bank injected a total of 15 trillion yen ($183 billion) into the markets Monday in a bid to bolster financial stability
  • The U.S. dollar rebounded sharply to ¥82.03 on Monday, after tumbling to a 2011 low of ¥80.60 earlier in the day, from ¥81.88 in New York late Friday.
  • The path for the yen remains uncertain as traders weigh the implications of the disaster, with some strategists looking for the currency to appreciate as insurance firms and others repatriate funds.
  • The yen rallied by around 20% in the wake of the January 1995 Kobe earthquake, eventually hitting an all-time high versus the U.S. dollar at ¥79.75.

And Here Comes Inflation….

(Business Insider, by John Maudlin, March 12, 2011)

http://www.businessinsider.com/and-here-comes-inflation-2011-3#ixzz1GaB9KRYL

  • Bernholz examined 12 of the 29 hyperinflationary episodes where significant data exist. Every hyperinflation looked the same. “Hyperinflations are always caused by public budget deficits which are largely financed by money creation.” But even more interestingly, Bernholz identified the level at which hyperinflations can start. He concluded that “the figures demonstrate clearly that deficits amounting to 40 percent or more of expenditures cannot be maintained. They lead to high inflation and hyperinflations. . . .” Interestingly, even lower levels of government deficits can cause inflation. For example, 20 percent deficits were behind all but four cases of hyperinflation.
  • Stay with us here, because this is an important point. Most analysts quote government deficits as a percentage of GDP. They’ll say, “The United States has a government deficit of 10 percent of GDP.” While this measure makes some sense, it doesn’t tell you how big the deficit is relative to expenditures. The deficit may be 10 percent of the size of the U.S. economy; currently the U.S. deficit is over 30 percent of all government spending. That is a big difference.
  • Interestingly, currently Japan and the United States are not far from levels that have preceded hyperinflations. The big difference between Japan or the United States and countries that have experienced hyperinflations is that the central banks are not monetizing most of the deficit. If they were to do that, then we would be one step away from paying quadrillions of dollars for a stamp or a sandwich (see Figure 8.6). It is extremely important to note Bernholz’s conclusion. Hyperinflations are not caused by aggressive central banks. They are caused by irresponsible and profligate legislatures that spend far beyond their means and by accommodative central banks that lend a helping hand to governments.
  • What are the implications for the present day? Fiscal liabilities are the real threat that will lead to higher inflation, if central banks continue to monetize government liabilities. In the case of a monetization, governments with independently authorized central banks disavow the overly convenient slippery slope option of paying their bills by printing new currency. A government must pay down its liabilities with currency already in circulation or else finance deficits by issuing new bonds and selling them to the public or to their central bank to acquire the necessary money. For the bonds to end up in the central bank, it must conduct an open market purchase. This action increases the monetary base through the money creation process. This process of financing government spending is called monetizing the debt. Monetizing debt is thus a two-step process where the government issues debt to finance its spending and the central bank purchases the debt from the public. The public is left with an increased supply of base money.
  • Hyperinflation completely destroys the purchasing power of private and public savings. No one wants to hold paper money, so it leads to excessive consumption and the hoarding of real assets. Investors face uncertainty and refuse to invest, unemployment skyrockets, and savings flee the country. The best-performing stock market in 2008 was Zimbabwe, which offered people a way to hedge their currency risks, even as their economy plummeted.

(Business Insider, Jan 28, 2010) Japanese Hyperinflation Could Turn The Dollar Into Toilet Paper

http://www.businessinsider.com/japans-hyperinflation-nightmare-2010-1?op=1#ixzz1GaHRzmvI

Frequently billed as a highly stable country, Japan's dark secret is that it should have exploded into a hyper-inflationary death spiral years ago.

Worse yet, it could easily take the U.S. financial system and U.S. dollar down with it. That's because the U.S. depends on Japan to fund its own debt binge.

We're not alone here. These concerns have been heavily informed by the research of Societe Generale. Japanese hyperinflation would be disastrous exactly because it goes against what most investors have been taught to expect

  • Keep in mind that Japan's bond market is the second largest in the world.
  • "As Japan's retirees age and run down their wealth, Japan's policymakers will be forced to sell assets, including US Treasuries currently worth $750bn, or Y70 trillion eight months worth of domestic financing. At nearly 10% of the outstanding US Treasury stock, this might well precipitate other government funding crises."
  • A declining population thus means that more debt is needed for funding, but fewer Japanese are able to buy it. That's the feedback loop that could trigger an explosion of hyperinflation.
  • "So who will fund the Japanese government's deficit in the future? It is not likely to be the international capital markets, especially if its bonds are offering only a 1.5% yield. But if international investors were to demand triple that, pricing JGBs in line with international bond market peers (all priced too generously in my opinion) the game would soon be up because Japan's current debt service already amounts to 35% of pre-bond issuance revenues."
  • The yen would rapidly depreciate as it became clear Japan was at risk of debt default. In a debt crisis, Japan would likely be forced to either devalue the yen in order to wipe away debt values or default on all of its’ own people.
  • Now the American crisis -- America would be in trouble since it would probably lose its second largest debt buyer
  • U.S. bonds yields would rise and the dollar would be under pressure. Japan would likely be selling foreign assets in order to shore up its finances. These assets would include its enormous holdings of U.S. bonds. Less demand for bonds would require higher interest rates to clear the market, all else equal.
  • Rates are forced to rise, which makes debt less manageable and puts the government under pressure. Then markets push interest rates even higher since the government looks like it's having trouble handling its debt, making the debt problem even worse.The dollar keeps tanking

Sen. Mike Lee (R-Utah) joined Glenn Beck on the radio program Wednesday to talk about why he believes President Donald Trump will nominate Judge Amy Coney Barrett to fill the Supreme Court vacancy created by Justice Ruth Bader Ginsburg's death.

Lee, a member of the Senate Judiciary Committee that will consider and vote on the nominee, also weighed in on another Supreme Court contender: Judge Barbara Lagoa. Lee said he would not be comfortable confirming Lagoa without learning more about her history as it pertains to upholding the U.S. Constitution.

Watch the video below to hear the conversation:

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This week on the Glenn Beck Podcast, Glenn spoke with Vox co-founder Matthew Yglesias about his new book, "One Billion Americans: The Case for Thinking Bigger."

Matthew and Glenn agree that, while conservatives and liberals may disagree on a lot, we're not as far apart as some make it seem. If we truly want America to continue doing great things, we must spend less time fighting amongst ourselves.

Watch a clip from the full interview with Matthew Yglesias below:


Find the full podcast on Glenn's YouTube channel or on Blaze Media's podcast network.

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Subscribe to Glenn Beck's channel on YouTube for FREE access to more of his masterful storytelling, thought-provoking analysis and uncanny ability to make sense of the chaos, or subscribe to BlazeTV — the largest multi-platform network of voices who love America, defend the Constitution and live the American dream.

'A convenient boogeyman for misinformation artists': Why is the New York Times defending George Soros?

Image source: Simon Dawson/Bloomberg via Getty Images

On the "Glenn Beck Radio Program" Tuesday, Glenn discussed the details of a recent New York Times article that claims left-wing billionaire financier George Soros "has become a convenient boogeyman for misinformation artists who have falsely claimed that he funds spontaneous Black Lives Matter protests as well as antifa, the decentralized and largely online, far-left activist network that opposes President Trump."

The Times article followed last week's bizarre Fox News segment in which former House Speaker Newt Gingrich appeared to be censored for criticizing Soros (read more here). The article also labeled Glenn a "conspiracy theorist" for his tweet supporting Gingrich.

Watch the video clip below for details:


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The former ambassador to Russia under the Obama Administration, Michael McFaul, came up with "7 Pillars of Color Revolution," a list of seven steps needed to incite the type of revolution used to upend Eastern European countries like Ukraine and Georgia in the past two decades. On his TV special this week, Glenn Beck broke down the seven steps and showed how they're happening right now in America.

Here are McFaul's seven steps:

1. Semi-autocratic regime (not fully autocratic) – provides opportunity to call incumbent leader "fascist"

2. Appearance of unpopular president or incumbent leader

3. United and organized opposition – Antifa, BLM

4. Effective system to convince the public (well before the election) of voter fraud

5. Compliant media to push voter fraud narrative

6. Political opposition organization able to mobilize "thousands to millions in the streets"

7. Division among military and police


Glenn explained each "pillar," offering examples and evidence of how the Obama administration laid out the plan for an Eastern European style revolution in order to completely upend the American system.

Last month, McFaul made a obvious attempt to downplay his "color revolutions" plan with the following tweet:

Two weeks later, he appeared to celebrate step seven of his plan in this now-deleted tweet:



As Glenn explains in this clip, the Obama administration's "7 Pillars of Color Revolution" are all playing out – just weeks before President Donald Trump takes on Democratic candidate Joe Biden in the November election.

Watch the video clip below to hear more from Glenn:


Watch the full special "CIVIL WAR: The Way America Could End in 2020" here.

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