• Tag Archives Central Banking
  • 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.


  • Central banks kept conspiring against gold long after it left the financial system

    A central bank Gold Pool which many people will be familiar with operated in the gold market between November 1961 and March 1968. That Gold Pool was known as the London Gold Pool.
    This article is not about the 1961-1968 London Gold Pool. This article is about collusive central bank discussions relating to an entirely different and more recent central bank Gold Pool arrangement. These discussions about a second Gold Pool began in late 1979, i.e. more than 11 years after the London Gold Pool had been abandoned. This article is Part 1 of a 2 part series. Part 2 will be published shortly.
    These discussions about a new Gold Pool arrangement took place in an era of soaring free market gold prices and in the midst of the run-up in the gold price to US$850 in January 1980.
    The discussions and meetings about a new Gold Pool in 1979 and 1980 and beyond which are detailed below, occurred at the highest levels in the central banking world and involved the world’s most powerful central bankers, some of whose names will be familiar to readers. The aim of these central bank discussions and meetings was to reach agreement on joint central bank action to subdue and manipulate the free market gold price in the early 1980s. Many of these collusive meetings were private meetings between a handful of Group of 10 (G10) central bank governors, and took place in the actual office of the president of the Bank of International Settlements in Basel, Switzerland.
    Above all, these central bank meetings show intent. Intent by a group of powerful central banks to manipulate a free market gold price so as to distort free market gold pricing signals. So these documents are timeless in that regard. The documents also illustrate the concern that a rising gold price in the free market creates for senior central bankers, and importantly, also shows that these same central bankers have no qualms, at least from a legal or moral perspective, of intervening to manipulate a gold price when they see it as a threat to their fiat currency monetary system.

    This post was published at GATA


  • The Fed Will Blink

    Honest Profession
    GUALFIN, ARGENTINA – The Dow rose 174 points on Thursday. And Treasury Secretary Steve Mnuchin said we’d have a new tax system by the end of the year.
    Animal spirits were restless. But which animals? Dumb oxes? Or wily foxes? Probably both.
    Since Thursday there have been two additional very spirited up days with large gaps – this is very rare in the DJIA, particularly from such a high level after a ~240% rally since the lows made 8 years ago… it continues to feel like a blow-off (and it happens against the backdrop of a sharp slowdown in money supply growth) – click to enlarge.
    But what caught our attention were the central bankers strutting across the yard and crowing with such numbskull cackles that even barnyard animals would be embarrassed by them. There was a time when central banking was an honest profession.
    Central bankers provided financing for the government. They backed the banking system, too, by holding savings as reserves, which they lent to solvent member banks in emergencies. They were tight-lipped, tight-laced, and tightwads. Their role was to say ‘no’ more often than ‘yes.’
    When the king wanted money to fight in a war… or build a bridge… the banker would give the terse reply: ‘Sire, we don’t have any.’ Real money was backed by gold. And credit had to be backed by real money, which meant it had to be saved. Savings were limited, as was money.

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


  • Central Banking Warfare Model Readies The Next Step

    The global capacity for debt has reached it’s zenith. So-called developed markets and emerging markets have all reached maximum debt load. Of the all the major countries that impact the global GDP name one that’s not fully levered with debt. I’ll wait here while you look for that needle in a haystack.
    We came into the bail outs. The G7 had levered up. Then we had the emerging markets lever up and they’re finished levering up and now everybody’s levered up.
    There is no place to go. We can go to an equity model and we can optimize bottom-up but that requires a legitimate pricing function. And when you’re trying to run the whole thing with fake intel, fake science, fake news… The harvesting machine needs a new way to dig and digital currency and digital cash is that way. But you need all those countries in the tent and you need the ability to force everybody into a digital system. Source
    The world (tent) must get inline with the idea of global governance and global currency, otherwise, it will not work.
    Cryptocurrencies and all the people who believe this digital illusion is going to somehow save us from the evil banksters are overlooking what I have been saying since bitcoin first came onto the scene – it plays into the hands of the banksters and their desire to move us all to a digital currency. If someone believes for a second that Amazon or any other large multinational corporation that conducts retail business is going to accept bitcoin when they have been instructed not to, they are simply living in a fantasy.
    That’s why the guys from bitcoin drive me nuts. Because they think ‘Oh this is how we’re going to be free’. No, you’re prototyping Mr. Globals digital currency. Source
    If a person thinks the central banks and their digital currency will COMPETE with bitcoin you are not seeing the entire picture. That is not going to happen – EVER. The reason gold was outlawed in the U. S. in the 1930’s was to keep gold from competing with the Federal Reserve Note. Why would anyone believe the Federal Reserve is going to allow a digital form of currency to compete with their wealth transferring mechanism on a large scale?

    This post was published at GoldSeek on 20 April 2017.


  • The War on Cash: Old and New

    Before the United States ran aground on the dangerous reefs of State interventionism and centralism, the dollar was not only a sign of stability, but also a symbol of human freedom. A dollar was a means to express your wants and commands to the business class. The consumer, for the most part, was sovereign. Any American could save, consume, and invest his money whose value was not debauched by a government in lack of resources. To this day, and despite the evils of inflationism and central banking, the dollar remains an instrument of freedom and independence for many Americans. There are those, however, who would like to change that. They are the Wall Street financiers, politicians, annointed intellectuals, and central bankers for whom a centralized control of the money supply is not enough. To them, not only the supply of money but also the free and innocent use of money should be strictly limited and regulated by the State. Their new enemy is the banknote and their new war is the war on cash.
    It is said of Heraclitus that he wrote that ‘no man ever steps in the same river twice, for it is not the same river and he is not the same man.’ The river has changed indeed, and so has changed the war on cash. It is an irony of American history that in the 1830s and 1840s, the war on cash meant something totally different than today. In the middle of the 19th century, the circulation of banknotes was synonymous with the excesses of fractional reserve banking and the debasement of the currency. At the time, the war on cash was a war for sound money.

    This post was published at Ludwig von Mises Institute on March 30, 2017.


  • THE CUMULATIVE EFFECTIVE TAX RATE

    Early Americans would roll over in their graves if they heard about modern-day America’s topsy-turvy departure from many of the hard-won freedoms and liberties of the American Revolution. They would be unable to make sense of all the different taxes we pay today, and especially the government’s legal entitlement to a portion of an American’s labor via an income tax. There was no such tax on labor for the earliest Americans; it was unconscionable to tax someone’s personal property, which one’s labor was then considered. The concept of paying one’s ‘fair share’ did not exist until after mid-20th century.
    In general, operating expenses of private corporations and the federal, state and corporate-county municipal governments are passed on to the end users (public) in the form of taxation.
    A partial list of the transparent as well as all the unseen hidden taxes include: federal and state income tax, county taxes, federal and state sales tax, accounts receivable tax, alcohol tax, alternative minimum tax, building permit tax, cigarette tax, corporate tax, dog license tax, education tax, estate tax, excise tax on imports, food license tax, fuel permit tax, gift tax, hotel tax, inheritance tax, inventory tax, car rental tax, IRS interest charges, IRS penalties and levies, license tax, labor tax (withholding), marriage license tax, Medicare tax, municipal state tax on insurance premiums, worker’s compensation and unemployment tax, property tax, recreational vehicle tax, sales tax, self-employment tax, road usage tax for truckers, school tax, Social Security tax, Supplemental Security Income (SSI), telecommunications tax, travel tax, utility tax, vehicle licensing registration tax, vehicle sales tax, watercraft registration tax, well permit tax, hospitality tax and last but not least, the hidden tax of inflation of a debt-based central banking system and all finance charges.

    This post was published at The Daily Sheeple on MARCH 30, 2017.


  • Donald Trump’s Whig Is Showing

    On February 28th, while addressing a joint session of Congress, President Trump quoted Abraham Lincoln and praised his economic philosophy:
    The first Republican President, Abraham Lincoln, warned that the “abandonment of the protective policy by the American Government [will] produce want and ruin among our people.”
    Lincoln was right – and it is time we heeded his words. I am not going to let America and its great companies and workers, be taken advantage of anymore.
    In channeling Lincoln, Trump underscored the reversion of the Republican Party to its economic roots which embraced protectionism, state-sponsored infrastructure spending, and central banking. While a new party in Lincoln’s day, its economic philosophy derived directly from the Whig Party and its champion, Henry Clay.
    Thomas DiLorenzo’s excellent book, The Real Lincoln, chronicles and exposes the Republican-Whig economic platform, known then as the ‘American System’ (the local flavor of mercantilism). While it is unlikely Lincoln addressed the issue of slavery before 1854, he constantly discussed and advocated the American System. As early as 1832, he called for an ‘internal improvements system and a high protective tariff.’ The ‘improvements’ specifically referred to the infrastructure of the day: railroads, shipping, and canals.

    This post was published at Ludwig von Mises Institute on March 22, 2017.


  • Five Reasons for Central Banks: Are They Any Good?

    In a time when Federal Reserve reforms are discussed more openly than ever before, it seems appropriate to also think about the more fundamental question of whether central banks are needed in the first place. In 1936, Vera C. Smith (later Lutz) published her doctoral dissertation The Rationale of Central Banking written under Friedrich A. von Hayek at the London School of Economics. Smith reviewed the economic controversies around central banking from the nineteenth to the early twentieth century in France, Belgium, Germany, England, Scotland, and the United States.
    Smith made very clear that central banks are not the result of natural developments in the banking sector, but come into existence through government favors.
    So what are the justifications for central banks? Smith identified five main arguments for central banks from an economic point of view. Although Smith has written with a gold standard as the underlying monetary system in mind, it is interesting to look at these arguments with the benefit of hindsight more than 80 years later. Has any one of the arguments actually made a strong or even conclusive case for central banking?

    This post was published at Ludwig von Mises Institute on February 22, 2017.


  • The Costs of Dragon Maintenance

    The next time you:
    Pay your mortgage, which is mostly interest; Pay your outrageously large auto or student loan; Pay an exorbitant amount for health insurance; Pay an even larger co-pay for a minor hospital procedure; Buy groceries for $100 and compare that purchase to what $100 bought in 1971; Realize that a four person family’s share of the U. S. national debt is nearly one-quarter million dollars … Consider the costs of fiat paper currencies, deficit spending, central banking and … dragon maintenance. ***
    A long time ago and far, far away outlaws raided a village and stole food, gold and women. The angry villagers could do little to protect their village except pray to their gods.
    A large and fearsome dragon descended into the village square answering their prayers. The dragon agreed to protect the village in return for food.

    This post was published at Deviant Investor on February 9, 2017.


  • The Coming Crisis in Central Banking

    The question of when will central banks fail is a popular one that comes in. Suffice it to say, the turmoil will hit Europe first. While so many people blame the Fed for all sorts of things, you must realize that Roosevelt usurped the Fed during the Great Depression and imposed a single interest rate administered from Washington. It was during April 1942, when the Department of the Treasury requested the Federal Reserve formally to commit to maintaining a low interest-rate peg of 3/8% on short-term Treasury bills. The Fed also implicitly capped the rate on long-term Treasury bonds at 2.5%. This became the known as the ‘peg’ with the express goal to stabilize the securities market and allow the federal government to engage in cheaper debt financing of World War II, which the United States had entered in December 1941. Today, we have extraordinary low rates of interest that have funded government, but has wiped out the real bond markets insofar as being a viable market long-term. The World War II accord to maintain low rates was followed by a collapse in bonds after 1951 once the accord ended. We will see the same outcome moving forward.

    This post was published at Armstrong Economics on Feb 2, 2017.


  • Doug Noland: A Dubious Monetary Backdrop

    This is a syndicated repost courtesy of Credit Bubble Bulletin. To view original, click here. Reposted with permission.
    Now that was one eventful week. President Trump wasted not even a minute in making good on a series of campaign promises. A bevy of executive orders moved to rein in Obamacare, withdraw from Trans-Pacific Partnership (TPP) trade negotiations, tighten immigration, cut regulation and advance the Keystone Pipeline. No earth-shattering surprises there. Perhaps more startling, Team Trump had yet to even unpack before broaching radical notions such as abandoning the strong dollar policy, imposing 20% border tax on imports from Mexico and opening direct confrontation with the media. Friday evening from the WSJ: ‘Trump’s First Week: Governing Without a Script.’
    At least for this week, I’ll leave it to others to pontificate on the economic merits of Trump policymaking. Dow 20,000 is testament to the market’s ongoing fixation with tax reduction and reform, de-regulation and imminent fiscal stimulus. There were enough disquieting developments this week to dent confidence, though break-out bullish exuberance proved resilient. Unwavering faith in the course of central banking surely underpins the markets, confidence that I expect to be challenged in 2017.

    This post was published at Wall Street Examiner by Doug Noland ‘ January 28, 2017.


  • Jim Rickards: European Central Bank to Tighten Later This Year

    This is a syndicated repost courtesy of The Daily Reckoning. To view original, click here. Reposted with permission.
    Jim Rickards joined CNBC’s The Rundown to offer his analysis for 2017 and what expectations on the European Central Bank’s (ECB) moves may be under rising Eurozone inflation and other regional factors.
    Rickards began the conversation by weighing in that, ‘Mario Draghi is my favorite central banker, I think he is the only one who really understands central banking.’ Draghi is the current head of the European Central Bank and a former Goldman Sachs banker who began his term as leader of the ECB in November 2011. Rickards went on to remark, ‘Central banks are actually not that powerful but they have been given a pretense. Mario Draghi says little, and does less. That is a very effective way of operating.’
    Jim Rickards is the New York Times bestselling author of The Road to Ruin. Rickards has worked previously on Wall Street for several decades and has advised the U. S intelligence community on topics surround currency wars and capital markets.

    This post was published at Wall Street Examiner by Craig Wilson ‘ January 20, 2017.


  • Six Steps Trump Can Take Toward Better Monetary Policy

    Since Nixon severed the final link to gold in 1971, the US dollar has lost more than 80% of its purchasing power, wreaking havoc on ordinary savers, conservative investors, and households on fixed incomes. Today, inflationary monetary policy continues to be a foundational tenet of all presidential administrations as politicians and central bankers have heedlessly been borrowing and printing currency without restraint in order to bankroll today’s bloated and insolvent federal government.
    RELATED: “What To Do While Waiting to End the Fed“
    Movement in the direction of sound money is badly needed, and even without abolishing central banking, there are several steps that the Trump administration can take toward improving monetary policy.
    Step One: Audit the Fed From Ron Paul to Bernie Sanders and many people in between, there has been plenty of support for ‘Audit the Fed’ legislation. Politicians and constituents alike agree that the Federal Reserve lacks even the most basic oversight a government-sponsored institution should have – particularly when its officials can make decisions which can bring the American economy to its knees.

    This post was published at Ludwig von Mises Institute on Dec 16, 2016.


  • Speculation Grows Japan Will Tighten Next

    First it was the Fed, then the ECB (which last week tapered when it reduced the monthly amount of bond purchases under its QE program). Now attention shifts to the Bank of Japan, because as the WSJ writes, one of central banking’s most aggressive easers – Kuroda’s Bank of Japan – may soon have to think about tightening for the first time since 2007.
    While it has yet to permeate the markets (confirmation would send the Yen soaring), the latest buzz in Japanese monetary-policy circles is that the BOJ may have to lift the 10-year government-bond target from a recently set zero, in the process tightening financial conditions even more. Indeed, as the WSJ notes, such a changed view on BOJ policy is quite a turnaround.
    Just a few months back investors and economists world-wide were discussing what would be the next easing steps in the bank’s 15-year fight to boost the economy and produce inflation. More certainly seems needed: Japan’s economy grew more slowly than expected in the latest quarter and prices are falling.
    So why switch gears now? Blame Donald Trump, stupid, whose miraculously adverse impact on the Yen has been more profound than either of Japan’s recent QEs…. and that is before Trump is even inaugurated, or reveals any of the details behind his fiscal stimulus plans.

    This post was published at Zero Hedge on Dec 11, 2016.


  • Is Janet Yellen Sabotaging The Trump Administration?

    Is Janet Yellen trying to screw Donald Trump? No, I’m not asking for possible titles to a porn movie (‘Trump Gets Janet Yellin” or ‘Trump Puts Down Ol’ Yellen’). But it really does seem like the Federal Reserve Chair(wo)man is out to get the Donald.
    Yellen recently told Congress’s Joint Economic Committee that an interest rate hike could be imminent if ‘incoming data provide some further evidence of continued progress toward the committee’s objectives.’ Markets have already priced in a hike of a quarter to a half of a percentage point. For now, stocks continue to be reach historic highs and the dollar is strong, even as Yellen and her central banking cohorts begin to ease on the gas.
    But will Yellen’s gambit plunge us into a recession is the question. Just because Wall Street is gorging on high returns doesn’t mean the economy is sound. For eight years and running, the Fed has kept interest rates near zero percent in an attempt to spark investment and borrowing. Unemployment has gradually shrunk during the Obama years, yet the workforce participation rateremains low by modern standards. Prior to Election Day, two-thirds of Americans were anxious about their economic future.
    Stock traders are popping the bubbly while middle America drinks the warm beer of worry. If you’re still in the dark as to why Trump stole the Rust Belt from Hillary, you need not look further than that.

    This post was published at Zero Hedge on Dec 6, 2016.


  • The Case Against Central Banking

    The following video was published by SilverDoctors on Dec 6, 2016
    Speaking at the Future of Freedom 5th Anniversary Conference on September 24, 1994, Roger Garrison, professor of economics at Auburn University, explores critiques of central banking from a number of perspectives. He summarizes the history of central banking, as well as the battle between the Keynesians, the monetarists (such as Milton Friedman), and the Austrians (including Murray Rothbard). Garrison’s talk is a great and accessible introduction to central banking and monetary policy.


  • As Cryptocurrencies Grow More Popular, IRS Attacks Bitcoin Exchange

    Coinbase, a popular American bitcoin exchange, is under fire by the IRS – one of the most ruthless government agencies – for being suspected of ‘failing to comply’ with tax laws.
    Because of the ‘war on cash,’ privacy concerns and price inflation, people are flocking into cryptocurrencies such a bitcoin. But such alternatives to monopoly-fiat paper money are hated by the handful of human overseers who control the monopolized central banking system.
    Privately held exchanges like Coinbase facilitate the exchange of fiat currencies and commodities for a given amount of bitcoin depending on the price being quoted.
    Without exchanges, bitcoin commerce would become at least improbable if not impossible.
    Enter instruments of the state like the IRS. The IRS is demanding information on all Coinbase user transactions from 2013-2015.
    IRS officials claim Coinbase may be helping US citizens evade taxes. This is in spite of Coinbase’s track record as being ‘stringently compliant’ with regulations in the past.

    This post was published at Dollar Vigilante on November 21, 2016.


  • Half Of The Population Of The World Is Dirt Poor – And The Global Elite Want To Keep It That Way

    Could you survive on just $2.50 a day? According to Compassion International, approximately half of the population of the entire planet currently lives on $2.50 a day or less. Meanwhile, those hoarding wealth at the very top of the global pyramid are rapidly becoming a lot wealthier. Don’t get me wrong – I am a very big believer in working hard and contributing something of value to society, and those that work the hardest and contribute the most should be able to reap the rewards. In this article I am in no way, shape or form criticizing true capitalism, because if true capitalism were actually being practiced all over the planet we would have far, far less poverty today. Instead, our planet is dominated by a heavily socialized debt-based central banking system that systematically transfers wealth from hard working ordinary citizens to the global elite. Those at the very top of the pyramid know that they are impoverishing everyone else, and they very much intend to keep it that way.

    This post was published at The Economic Collapse Blog on November 22nd, 2016.


  • Austrians at the Fed?

    Coverage of central banks and monetary policy in popular financial media outlets like Bloomberg, Financial Times, Forbes, Wall Street Journal, and The Economist is almost uniformly bad. The reporting and analysis are superficial, and the writers tend to assume facts not in evidence. The same myths repeat themselves ad nauseam: the Fed’s vaunted “independence” must be kept sacrosanct; the obvious and proper purpose of monetary policy is monetary stimulus; Ph. D central bankers hold special technical knowledge which us average folks should not question; and that central bank decisions are wholly unpolitical.
    These myths are used to prop up trite and superficial conclusions, always with the implication that “everyone knows” X, Y, and Z are true about central banking. But many times those conclusions are not true, or at least not widely agreed upon. And when they are reported as gospel truth, the financial press effectively become cheerleaders for the Fed. While they may call for tinkering with interest rates or replacing one Governor with another, the presumption that central banks are ever and always benevolent goes unchallenged.
    For example, consider this recent article from Bloomberg fretting about “Austrians” taking over the Fed under a Trump administration:
    Trump’s characterization of the current economy as “false” suggests a sympathy for the Austrian school of economics, in which short-term monetary benefits are believed to come with longer-run costs. The “false” economy fosters asset price bubbles that pop and end in an even deeper recession than would otherwise be the case.
    A Fed packed with Austrian economists would likely react slowly to a recession and resist extraordinary policies such as quantitative easing. They would also likely attempt to tighten policy soon after the recession ended. They would, in other words, tend toward a liquidationist approach that risks turning the Great Recession into another Great Depression.

    This post was published at Ludwig von Mises Institute on November 22, 2016.