• Tag Archives Central Banking
  • China Accounts For A Third Of Global Corporate Debt And GDP… And The ECB Is Getting Very Worried

    There is a certain, and very tangible, irony in the central banks’ response to the Global Financial Crisis, which was first and foremost the result of unprecedented amounts of debt: it was to unleash an even greater amount of debt, or as BofA’s credit strategist Barnaby Martin says, “the irony in today’s world is that central banks are maintaining loose monetary policies to generate inflation…in order to ease the pain of a debt “supercycle”…that itself was partly a result of too easy (and predictable) monetary policies in prior times.”
    The bolded sentence is all any sane, rational human being would need to know to understand the lunacy behind modern monetary policy and central banking. Unfortunately, it is not sane, rational people who are in charge of the money printer, but rather academics fully or part-owned, by Wall Street as Bernanke’s former mentor once admitted (see “Bernanke’s Former Advisor: “People Would Be Stunned To Know The Extent To Which The Fed Is Privately Owned“). Actually, when one considers where the Fed’s allegiance lies (to its owners), its actions make all the sense in the world. The problem, as Martin further explains, is that “clearly if central banks remain too patient and predictable over the next few years this risks extending the debt supercycle further.”
    Translated: the bubble will get even bigger. Unfortunately, it is already too big. As Martin shows in chart 9 below, which breaks down global non-financial debt growth over the last 30yrs split by type (household debt, government debt and non-financial corporate debt), “it is currently hovering around the $150 trillion mark and has shown few signs of declining materially of late. Yet, the “delta” of debt growth over the last 10yrs has been on the non-financial corporate side. Government debt growth has slowed down recently as countries have clawed back to fiscal prudence. Households have also deleveraged over the last few years given their rapid debt accumulation prior to the Lehman event.”

    This post was published at Zero Hedge on Nov 10, 2017.


  • Doug Noland: End of an Era

    Of the diverse strains of inflation, asset inflation is by far the most dangerous. A bout of consumer price inflation would be generally recognized as problematic and rectified through a tightening of monetary conditions. On the other hand, asset price inflation is both celebrated and venerated. There is simply no constituency calling for a tightening of conditions to ward off the deleterious effects of rising asset prices, Bubbles and attendant economic maladjustment. And as we’ve witnessed, the bigger the Bubble the more powerful the constituencies that rationalize, justify and promote Bubble excess.
    About one year ago, I was expecting a securities markets sell-off in the event of an unexpected Donald Trump win. A Trump presidency would create disruption, upheaval and major uncertainties – political, geopolitical, economic and social. Instead of a fall, the markets experienced a short squeeze and unwind of hedges. Over-liquefied markets and a powerful inflationary bias throughout global securities markets won the day – and the winning runs unabated. We’ve come a long way since 1992 and James Carville’s ‘I used to think that if there was reincarnation, I wanted to come back as the president or the pope or as a .400 baseball hitter. But now I would like to come back as the bond market. You can intimidate everybody.’ New age central banking has pacified bond markets and eradicated the vigilantes. These days it’s the great equities bull market as all-powerful intimidator.

    This post was published at Wall Street Examiner on November 4, 2017.


  • “What Happens When The Market Can No Longer Pretend”: Charting Today’s Minsky Moment Dynamics

    Back in July, Deutsche Bank’s derivative strategist Aleksandar Kocic believed he had found the moment the market broke, which he defined as a terminal dislocation between market and economic policy uncertainty: as he wrote 4 months ago, it was some time in 2012 that markets “lost their capacity to deal with uncertainty.’

    It was also some time in 2012 that traders and market participants realized central banks have not only taken over the market, but have no intention of ever leaving as the alternative is a crash that wipes out 8 years of artificial “wealth effect” creation and puts the very concept of fractional reserve and central banking in jeopardy.

    This post was published at Zero Hedge on Oct 28, 2017.


  • How The Elite Dominate The World – Part 2: 99.9% Of The Global Population Lives In A Country With A Central Bank

    Even though the nations of the world are very deeply divided on almost everything else, somehow virtually all of them have been convinced that central banking is the way to go. Today, less than 0.1% of the population of the world lives in a country that does not have a central bank. Do you think that there is any possible way that this is a coincidence? And it is also not a coincidence that we are now facing the greatest debt bubble in the history of the world. In Part I of this series, I discussed the fact that total global debt has reached 217 trillion dollars. Once you understand that central banks are designed to create endless debt, and once you understand that 99.9% of the global population lives in a country that has a central bank, then it finally makes sense why we have accumulated so much debt. The elite of the world use debt as a tool of enslavement, and central banking has allowed them to literally enslave the entire planet.
    Some of you may not be familiar with how a ‘central bank’ differs from a normal bank. The following definition of a ‘central bank’ comes from Wikipedia…
    A central bank, reserve bank, or monetary authority is an institution that manages a state’s currency, money supply, and interest rates. Central banks also usually oversee the commercial banking system of their respective countries. In contrast to a commercial bank, a central bank possesses a monopoly on increasing the monetary base in the state, and usually also prints the national currency,[1] which usually serves as the state’s legal tender.

    This post was published at The Economic Collapse Blog on October 16th, 2017.


  • Federal Reserve President Kashkari’s Masterful Distractions

    Authored by MN Gordon via EconomicPrism.com,
    How is it that seemingly intelligent people, of apparent sound mind and rational thought, can stray so far off the beam? How come there are certain professions that reward their practitioners for their failures?
    The central banking and monetary policy vocation rings the bell on both accounts. Today we offer a brief case study in this regard.
    Minneapolis Federal Reserve President Neel Kashkari is a man with strong convictions. He’s what the late Eric Hoffer would’ve classified as ‘the true believer.’ According to Hoffer:
    ‘It is the true believer’s ability to ‘shut his eyes and stop his ears’ to facts that do not deserve to be either seen or heard which is the source of his unequaled fortitude and constancy. He cannot be frightened by danger nor disheartened by obstacle nor baffled by contradictions because he denies their existence.’ For starters, Kashkari believes the Federal Reserve, an unelected board of appointments, can crunch economic data into pie graphs and bar charts and draw conclusion as to what they should fix the price of credit at. Moreover, he believes that by fixing credit at the ‘correct’ price, the Fed can somehow ‘optimize’ the economy.
    This idea is patently false. Remember, the economy is comprised of billions of people with ever changing interactions. Activities and exchanges are always adapting.

    This post was published at Zero Hedge on Oct 6, 2017.


  • Kevin Warsh May Be The Next Fed Head – Let’s See What He Really Thinks

    As reported earlier this morning by the Wall Street Journal, President Trump and Treasury Secretary Mnuchin met with Kevin Warsh yesterday to discuss the potential vacancy at the Fed next February.
    Warsh already has central banking experience, having sat on the Federal Open Market Committee (FOMC) from February 2006 until March 2011.
    Two and a half years after he resigned from the Fed, he emerged as a vocal critic of FOMC policies, including those policies he helped craft. He published an op-ed in the WSJ on November 12, 2013, and it was quite the editorial. As that happened to be the first week of hunting season, we suggested that Warsh had declared open season on his ex-colleagues, and we came up a gimmicky picture to go along with our reporting:

    This post was published at Zero Hedge on Sep 29, 2017.


  • Gold Standard Resulted In ‘Fewer Catastrophes’ – FT

    Editor Mark O’Byrne
    – ‘Going off gold did the opposite of what many people think’ – FT Alphaville
    – ‘Surprising’ findings show benefits of Gold Standard
    – Study by former Obama advisor in 1999 and speech by Bank of England economist in 2017 make case for gold
    – UK economy was ‘much less prone to extremes’ under than the gold standard – research shows
    – ‘Gold standard seems to have produced fewer catastrophes for Britain’ – data shows
    – FT still wary of gold standard arguing ‘stability can be overrated and growth is worth having’
    – Finding is not surprising and joins a wealth of evidence and research that shows gold’s importance as money, a store of value and safe haven asset
    300 years ago last week on the 21st September, 1717 Sir Isaac Newton, Master of the Royal Mint of Great Britain, accidentally invented the gold standard.
    Last month it was the 46th anniversary of President Nixon ending the gold standard. Since then the world has existed on a system of fiat paper and digital currency. It works so badly that it has lead to the global financial crisis, unending debt issues and a dramatic devaluation in sovereign currencies.
    Despite this, much of the media and central banking system remain supporters of the current financial and monetary status quo.

    This post was published at Gold Core on September 28, 2017.


  • How Central Banking Increased Inequality

    Although today high levels of inequality in the United States remain a pressing concern for a large swath of the population, monetary policy and credit expansion are rarely mentioned as a likely source of rising wealth and income inequality. Focusing almost exclusively on consumer price inflation, many economists have overlooked the redistributive effects of money creation through other channels. One of these channels is asset price inflation and the growth of the financial sector.
    The rise in income inequality over the past 30 years has to a significant extent been the product of monetary policies fueling a series of asset price bubbles. Whenever the market booms, the share of income going to those at the very top increases. When the boom goes bust, that share drops somewhat, but then it comes roaring back even higher with the next asset bubble.
    The Cantillon Effect The redistributive effects of money creation were called Cantillon effects by Mark Blaug after the Franco-Irish economist Richard Cantillon who experienced the effect of inflation under the paper money system of John Law at the beginning of the 18th century.1 Cantillon explained that the first ones to receive the newly created money see their incomes rise whereas the last ones to receive the newly created money see their purchasing power decline as consumer price inflation comes about.
    Following Cantillon and contrary to Fisher and other monetary theorists of his time, Ludwig von Mises was the first to emphasized these Cantillon effects in terms of marginal utility analysis. With an increase in the stock of money, the cash balances of the early receivers of the newly created money increase. Correspondingly, the marginal utility they give to money decreases and the individuals in question buy either investment or consumption goods, thus bidding up the prices of those goods and increasing the cash balances of their sellers. With this step by step process, the price of goods will increase only progressively and affect both the distribution of income and wealth as well as the different price ratios.

    This post was published at Ludwig von Mises Institute on August 16, 2017.


  • Self Ownership in the Age of Authoritarianism: Jeff Berwick on Open Your Mind Radio Ireland

    The following video was published by The Dollar Vigilante on Jul 31, 2017
    Jeff is interviewed by Alan James and Steven George for Open Your Mind Radio Ireland, topics include: Jeff’s intriguing upcoming travel plans, the financial system and cryptocurrencies, interest rate madness, socialism and central banking, getting rid of governments, self ownership, we don’t have capitalism, control of the internet, increasing authoritarianism, the Shemitah, jubilee and market cycles, the dumbing down and drugging of the US population, EBT cards, preparing for a major crash, hyperinflation, diet and growing your own food, self sufficiency, self improvement


  • The Globalist One World Currency Will Look A Lot Like Bitcoin

    This week the International Monetary Fund shocked some economic analysts with an announcement that America was “no longer first in the world” as a major economic growth engine. This stinging assertion falls exactly in line with the narrative out of the latest G20 summit; that the U. S. is fading away leaving the door open for countries like Germany and China to join forces and fill the power void. I wrote about this rising relationship between these two nations as well as the ongoing controlled demolition of America’s economy in my article ‘The New World Order Will Begin With Germany And China’.
    I find it interesting that the IMF is once again taking the lead on perpetuating the image of a failing U. S., just as they often push for the concept of a single global currency system to replace the dollar as the world reserve. The most common faulty counter-argument I run into when outlining the globalist agenda to supplant the dollar with the Special Drawing Rights basket system is that “the IMF is a U. S. government controlled organization that would never undermine U. S. authority.” Obviously, the people who make this argument have been thoroughly duped.
    The IMF is constantly and actively undermining America’s economic position, because the IMF is NOT an American controlled organization; its loyalty is to globalism as an ideology as well as the international financiers that dominate central banking. America’s supposed “veto power” within the IMF is incidental and meaningless – it has not stopped the IMF from chasing the replacement of the the dollar structure and forming the fiscal ties that stand as the root of what they sometimes call the “global economic reset.”

    This post was published at Alt-Market on Thursday, 27 July 2017.


  • Against Irredeemable Paper – Precious Metals Supply and Demand

    The Antidote
    Something needs to be said. We are against the existence of irredeemable paper currency, central banking and central planning, cronyism, socialized losses and privatized gains, counterfeit credit, wealth transfers and bailouts, and welfare both corporate and personal.
    When we write to debunk the conspiracy theories that say manipulation is keeping gold from hitting $5,000 (one speaker here at Freedom Fest claimed gold will go to $65,000), we are not trying to defend the Fed. When we discuss the flaws in predicting that kind of price, and the error in expecting to profit from it, we are not expressing a pro irredeemable dollar view.
    We are saying there are good arguments against the regime of irredeemable paper currency – but this is not one of them. Irredeemable currency has two fatal flaws. One is the interest rate is unhinged.
    It can skyrocket as it did from the end of WWII through 1980, or collapse as it has been doing since then. Two is there is no extinguisher of debt. Debt grows – must necessarily grow – exponentially. As it has been doing for many decades.

    This post was published at Acting-Man on July 25, 2017.


  • What To Do With Your Cash?

    Have you moved a material percentage of your financial portfolio to cash? Have you become so concerned about the meteoric ramp upwards in asset prices that you find it wiser instead to move to the sidelines, build “dry powder”, and wait to re-enter the markets at saner valuations?
    If so, you have my sympathies.
    The past 5+ years have been brutal for savers pursuing this strategy. I know this well, as I’m one of those folks, too.
    The Mother Of All Financial Bubbles As we’ve chronicled for years here at PeakProsperity.com, the global central banking cartel started flooding the world with liquidity (aka, money printed from thin air) in response to the arrival of the Great Financial Crisis in late 2008. And they never stopped.

    This post was published at PeakProsperity on Saturday, July 22, 2017.


  • Doug Noland: New Age Mandate

    This is a syndicated repost courtesy of Credit Bubble Bulletin . To view original, click here. Reposted with permission.
    A journalist’s question during Mario Draghi’s ECB post-meeting press conference: ‘… There was a sharp reaction from financial markets to your Sintra speech. You must have looked at the Fed experience of 2013. Is there any concern in the Governing Council that the so-called tantrum or a similar reaction can happen in the eurozone when you start discussing changes in your stance?’
    Draghi: ‘I won’t comment on market reactions, but let me give you the bottom line of our exchanges: basically, inflation is not where we want it to be, and where it should be. We are still confident that it will gradually get there, but it isn’t there yet, and that’s why the Governing Council reiterated the forward guidance, the asset purchase programme, the interest rates and all this package of monetary accommodation; and reiterated that the present very substantial monetary accommodation is still necessary. Let me read the introductory statement: ‘Therefore a very substantial degree of monetary accommodation is still needed for underlying inflation pressures to gradually build up and support headline inflation developments in the medium term.’
    Draghi continued: ‘But let me just make clear one thing: after a long time, we are finally experiencing a robust recovery, where we only have to wait for wages and prices to move towards our objective. Now, the last thing that the Governing Council may want is actually an unwanted tightening of the financing conditions that either slows down this process or may even jeopardise it; and that’s why we retain the second bias, or let’s call it, reaction function. ‘If the outlook becomes less favourable or if financial conditions become inconsistent with further progress towards a sustained adjustment in the path of inflation, we stand ready to increase our asset purchase programme in terms of size and/or duration.’ And I think the Governing Council has given enough evidence that when flexibility is needed to achieve its objectives, it has been very able to find all that was needed. So that’s why we keep this bias.’
    This exchange gets to the heart of a momentous issue. Recall the swift market reaction to ‘hawkish’ Draghi’s comments from Sintra (June 26-28 ECB Forum on Central Banking) and, soon after, ECB officials expressing that markets had misinterpreted his remarks. Markets this week were awaiting ‘dovish’ clarification. Draghi soundly beat expectations.

    This post was published at Wall Street Examiner on July 22, 2017.


  • ‘A Stock Market Crash is Coming!’

    Conventional ‘Wisdom:’ Markets move up and down, but the stock market always comes back. The DOW is frothy and needs a correction, but the stock markets are healthy and big gains lie ahead.
    Pessimistic version: Jim Rogers said, ‘the next crash will ‘the biggest in my lifetime.” [Coming soon …]
    Question: Given the craziness in politics, the Middle-East, Central Banking, and global debt levels … do you own enough gold bullion?
    Conventional thinking: ‘Trump will save the markets, reduce taxes, and boost stock prices even higher.’ [Don’t plan on it.]
    ‘Gold pays no interest and has gone down for six years.’ [True but irrelevant.]
    ‘The Yellen Fed can’t let market bubbles pop so they will create more QE, more bond monetization, ‘printing,’ and Fed support. In short, the ‘Yellen Put’ is alive and will protect investors.’ [Maybe not…]
    ‘The market got hurt in 1987, 2000, and 2008. It rallied back each time and went higher. This time will be no different. Stocks may correct but they are a good long term investment.’ Read ‘The Bull Case: S&P is heading to 3,000.’ [How big a loss before the rally?]

    This post was published at GoldStockBull on July 20th, 2017.


  • How Trump’s Nominee for the Fed Could Turn Central Banking on Its Head

    Jay L. Zagorsky, The Ohio State University
    President Donald Trump on July 10 nominated Randal Quarles to be one of the seven governors of the Federal Reserve System, the central bank of the United States.
    Before I get to Quarles and his qualifications, it’s important to understand the Fed and what it does. Its decisions are vital to every person on the planet who borrows or lends money (pretty much everybody) since it has enormous influence over global interest rates. Its board of governors also influences most other aspects of the global financial system, from regulating banks to how money is wired around the world.
    Quarles, for his part, is clearly qualified for a job at the pinnacle of financial regulation. He has held numerous positions in the US Treasury Department, including undersecretary for domestic finance under George W. Bush, and was the US executive director at the International Monetary Fund (IMF). He has also worked on Wall Street for The Carlyle Group and founded his own investment company, The Cynosure Group. He also has a law degree from Yale.
    The issue that I believe deserves careful scrutiny, however, does not involve his qualifications. Rather it’s a view of his that, if allowed to permeate the Fed, would represent a seismic shock to how the central bank operates and could potentially have severe consequences if – or when – we stumble into another financial crisis like the one we endured only a decade ago.

    This post was published at FinancialSense on 07/12/2017.


  • There’s One Big Problem With the Fed’s Latest Stress Test

    This is a syndicated repost courtesy of The Daily Reckoning. To view original, click here. Reposted with permission.
    The Federal Reserve released its latest stress test report in June and buried within the findings were details that an alarming number of banks would lose tens of billions within the financial system yet again.
    Nearly a decade since the global financial crisis that saw countless jobs, homes and savings ruined – signs show that the system is still considerably at risk.
    By mandate the Fed is to be a central banking institution that encourages and sets conditions for secure banking and financial systems to exist. At its core, the central bank is meant to stabilize and grow the economy through measures such as supervising what it has labeled as banking holding companies (BHCs).
    After the Dodd-Frank Act was passed in 2010, the Fed took on the responsibility to conduct stress test reports on financial firms, the select BHC’s, that maintained $50 billion plus in consolidated assets. The purpose was to see if those firms had enough money saved and whether they would be able to meet required financial levels in order to survive massive losses during stressful economic conditions.

    This post was published at Wall Street Examiner by Craig Wilson ‘ July 5, 2017.


  • “The Fed Is Preparing To Make The Rich Poorer”: BofA

    Remember when – for years and years after the grand, global QE experiment started – any suggestion that central bankers are the primary cause behind global wealth inequality, and thus directly responsible for such political outcomes as Brexit and Trump – was branded as a conspiracy theory by bloggers living in their parents’ basement? We do, because we were accused over and over of just that (our position on the Fed and other central banks should be familiar to all by now).
    Well, as of this morning, none other than the chief investment strategist at BofA, Michael Hartnett, is a basement dwelling, tinfoil hatter because in his latest Flow Show report, writes that “central banks have exacerbated inequality via Wall St inflation & Main St deflation.”

    Of course we knew that, you knew that, and pretty much everyone else knew that, but those whose jobs depended on not admitting it, kept their mouths shut terrified of pointing out that the central banking emperor is not only naked, but an idiot. Well, the seal has been broken, and even the biggest cowards from within the financial establishment, most of whom can be found on financial twitter for some inexplicable reason, can speak up now.

    This post was published at Zero Hedge on Jun 30, 2017.


  • Bill Blain: “What A Fascinating Week This Is Shaping Up To Be”

    By Bill Blain of Mint Partners, Blain’s Morning Porridge – June 29th 2017
    What a difference a day makes
    ‘And a new day will dawn for those who stand long, and the forests will echo with laughter.’
    What a fascinating week this is shaping up to be – on Monday I speculated it was going to be about Central Bankers re-thinking where we are. I guess I guessed right. One of my colleagues from BGC, Ara Levonian, summed it up nicely in his daily comment this morning:
    ‘What a difference a day makes as the ECB pumped out a story that the whole market misinterpreted Draghi despite him speaking in English and most of us having English as out first language. Carney changed his mind from last week, which has become the norm, and said there could be need to remove some stimulus. [They] have realised the marginal utility of QE is almost non-existent now, if not negative and are SERIOUSLY WORRIED ABOUT ASSET PRICE INFLATION. (My emphasis!)
    Draghi might take a tip from Alan Greenspan, who provides the most famous Central Banking quote: ‘Since becoming a central banker I have learned to mumble with great incoherence. If I seem unduly clear to you, you must have misunderstood what I said.’ It’s often shortened to ‘If I have made myself clear, I’ve misspoken.’

    This post was published at Zero Hedge on Jun 29, 2017.


  • One Fed President Says The Rate Hike Decision Was A Choice “Between Faith And Data”

    Over the years many have accused central banking of being the world’s latest (and most profitable) religion, with central bankers the only modern day priests left that still matter (to the tune of $75 trillion, the market cap of all stocks in the world).
    Today, in a blog post from Minneapolis Fed president Neel Kashkari explaining why he dissented from the latest Fed rate hike decision, he admits as much when he says “for me, deciding whether to raise rates or hold steady came down to a tension between faith and data. On one hand, intuitively, I am inclined to believe in the logic of the Phillips curve: A tight labor market should lead to competition for workers, which should lead to higher wages. Eventually, firms will have to pass some of those costs on to their customers, which should lead to higher inflation. That makes intuitive sense. That’s the faith part.”
    In a surprisingly honest assessment, he then says that “unfortunately, the data aren’t supporting this story, with the FOMC coming up short on its inflation target for many years in a row, and now with core inflation actually falling even as the labor market is tightening. If we base our outlook for inflation on these actual data, we shouldn’t have raised rates this week. Instead, we should have waited to see if the recent drop in inflation is transitory to ensure that we are fulfilling our inflation mandate.”
    Which inductively suggests that the rest of the FOMC is still driven by, well, faith alone. Unfortunately, this time the faith has consequences, and as Citi’s Matt King explained earlier, the Fed’s decision to not only hike rates but also to begin a $450 billion annual reduction in its balance sheet, will have “significant adjustment in valuations.”

    This post was published at Zero Hedge on Jun 16, 2017.


  • Economic Consequences of More Europe

    A resurgence in the euro after recent elections in Europe could leave it top dog in global currency markets. Understanding what that means for the U. S dollar will be pivotal for investors that operate in greenbacks.
    Bloomberg’s recent headline ‘This Could be the Euro’s Best Year in a Decade’ shows signs that all eyes are watching Europe.
    Currently, the Euro has smashed to a six-month high with aggressive talk coming from the central banking crowd on the European continent.
    German Finance Minister Wolfgang Schaeuble, arguably one of the most influential voices in Europe, said that he views the need to further increase in integration in Europe. The German minister went so far as to hint at creating a ‘parliament’ for the euro currency bloc.
    In international currency exchanges things are beginning to change. The world’s major reserve currency, the U. S dollar, has seen investors begin to wake up to the reality of a lackluster expectations from the White House.
    Impact of the U. S Dollar on Europe
    The U. S dollar is now back to levels prior to the November election.
    Does that mean a the euro currency surge caused it? No.

    This post was published at Wall Street Examiner on May 26, 2017.