• Tag Archives Dollar
  • Japan’s Lonely Single Men Are Settling For Virtual Reality “Wives Of The Future”

    In a country where over 70% of unmarried men between 18 and 34, and 60% of women, have no relationship with a member of the opposite sex, and where birthrates are among the lowest in the world after Japanese women gave birth to fewer than one million babies in 2016 for the first time since the government began tracking birth rates, Bloomberg reports on an industry that’s profiting off the reluctance of young Japanese men and women to find a human partner.
    ***
    What Bloomberg calls the ‘virtual love industry’ in Japan has blossomed into a multi-million-dollar concern as unmarried men and women increasingly turn to simulated digital offerings for companionship. Inventors create applications that essentially allow users to build a ‘virtual wife’ or ‘virtual husband’. While we imagine virtual companions bring badly needed comfort to millions of lonely Japanese, as Bloomberg notes, the industry does have a dark side: Some virtual-reality offerings promote unrealistic and even damaging portrayals of women as submissive. And men as domineering and menacing.

    This post was published at Zero Hedge on Sep 22, 2017.


  • SEPT 22A/SENATOR MCCAIN DITCHES LAST ATTEMPT AT REAP OF OBAMACARE AND THAT SENDS GOLD AND SILVER HIGHER/ GOLD ENDS THE DAY UP $1.70 BUT SILVER DOWN 5 CENTS/ BOTH GOLD AND SILVER COT IS GOOD FOR A…

    GOLD: $1294.45 UP $1.70
    Silver: $16.95 DOWN 5 CENT(S)
    Closing access prices:
    Gold $1297.50
    silver: $17.02
    SHANGHAI GOLD FIX: FIRST FIX 10 15 PM EST (2:15 SHANGHAI LOCAL TIME)
    SECOND FIX: 2:15 AM EST (6:15 SHANGHAI LOCAL TIME)
    SHANGHAI FIRST GOLD FIX: $1303.72 DOLLARS PER OZ
    NY PRICE OF GOLD AT EXACT SAME TIME: $1295.85
    PREMIUM FIRST FIX: $7.87 (premiums getting larger)
    xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx
    SECOND SHANGHAI GOLD FIX: $1306.41
    NY GOLD PRICE AT THE EXACT SAME TIME: $1296.60
    Premium of Shanghai 2nd fix/NY:$9.81 (premiums getting larger)

    This post was published at Harvey Organ Blog on September 22, 2017.


  • Gold Bullion Fails to Recover $1300 Even as Dollar Retreats Post-Fed, Kim + Trump Trade Insults

    Gold bullion rallied almost $10 per ounce on Friday from yesterday’s 4-week lows against the Dollar but failed to recover what analysts called the “key pivot” of $1300 despite claims of safe-haven buying after Pyongyang threatened to test a nuclear bomb over the Pacific Ocean.
    The Yen rose faster versus the Dollar, erasing last week’s 0.7% gain in gold for Japanese investors, as Kim Jong-un – leader of the regime in neighboring North Korea – called US President Trump “deranged”, and Trump called Kim a “madman”.
    “Chinese interest was once again prevalent to underpin the early session bid,” says one Asian bullion desk.
    Ratings agency S&P today downgraded China‘s sovereign debt one notch to A+, saying that credit growth remains strong and “deleveraging is likely to be [too] gradual.”
    This was the ” wrong decision” Beijing’s Finance Ministry replied.
    Chinese gold premiums, over and above the global reference rate of London prices, held Friday at $7 per ounce, still below the typical incentive for new imports of $9-10 per ounce.
    After India’s gold bullion imports tripled from a year ago to $15 billion-worth in April-August, “We don’t favor a blanket restriction on gold imports,” the Economic Times today quotes a Commerce Department official, “[because] it may involve disputes in the World Trade Organisation.”

    This post was published at FinancialSense on 09/22/2017.


  • Stocks and Precious Metals Charts – Ubi Sunt? Not With a Bang, But a Whimper

    ‘Love does not make you weak, because it is the source of all strength, but it makes you see the nothingness of the illusory strength on which you depended before you knew it.’
    Lon Bloy
    Stocks were a little wobbly today, although the VIX continued to be at quite low levels for this year at least.
    The economic news is mixed, as usual.
    The dollar gave a little of yesterday’s sharp rally higher back today. The rally itself was more technical than anything else, given the long decline that it has already seen. Certainly any notions of a hawkish Fed raising rates with enough fortitude to make a difference in the dollar is sheer fantasy.
    The Fed may have one more rate increase in them for this year, but they are already on thin ice given the weak recovery and lingering lack of organic growth. The reasons are so obvious one really hates to keep repeating them. The economists certainly know them, but they are reluctant to discuss the Emperor’s nakedness. Alas, they are too often a craven careerist lot as a whole. But such are the times.
    As my Greek attorney put it just today, “Hillary just wants to tweak the status quo because it works well for her and her donors Bernie wanted to change the status quo, so he was a threat to everyone but the public.”
    Indeed. The credibility trap is alive and well, and crippling the impulse and efforts to reform.
    Have a pleasant evening.

    This post was published at Jesses Crossroads Cafe on 21 SEPTEMBER 2017.


  • The forthcoming global crisis

    The global economy is now in an expansionary phase, with bank credit being increasingly available for non-financial borrowers. This is always the prelude to the crisis phase of the credit cycle. Most national economies are directly boosted by China, the important exception being America. This is confirmed by dollar weakness, which is expected to continue. The likely trigger for the crisis will be from the Eurozone, where the shift in monetary policy and the collapse in bond prices will be greatest. Importantly, we can put a tentative date on the crisis phase in the middle to second half of 2018, or early 2019 at the latest.
    Introduction
    Ever since the last credit crisis in 2007/8, the next crisis has been anticipated by investors. First, it was the inflationary consequences of zero interest rates and quantitative easing, morphing into negative rates in the Eurozone and Japan. Extreme monetary policies surely indicated an economic and financial crisis was just waiting to happen. Then the Eurozone started a series of crises, the first of several Greek ones, the Cyprus bail-in, then Spain, Portugal and Italy. Any of these could have collapsed the world’s financial order.

    This post was published at GoldMoney on September 21, 2017.


  • Global Markets Spooked By North Korea H-Bomb Threat; Focus Turns To Brexit Speech

    S&P futures retreated along with European and Asian shares with tech, and Apple supplier shares leading the drop while safe havens such as gold and the yen rose, as the war of words between U. S. President Donald Trump and Kim Jong Un escalated and North Korea threatened to launch a hydrogen bomb, leading to a prompt return of geopolitical concerns. Trade focus now turns to a planned speech by Theresa May on Brexit (full preview here).
    As reported last night, the key overnight event was the latest threat by North Korea that its counter-measure may mean testing a hydrogen bomb in the Pacific, according to reports in Yonhap citing North Korea’s Foreign Minister. North Korea’s leader Kim said North Korea will consider “corresponding, highest level of hard-line measure in history” against US, while he also stated that President Trump’s UN speech was rude nonsense and demonstrated insanity and inhumanity which confirmed North Korea’s nuclear and missile advances are on right path and will continue to the end. There was more on the geopolitical front with the Iranian President
    informing armed forces that the nation will bolster its missile
    capabilities, according to local TV.
    As a result, treasury yields pulled back and the dollar slid the most in two weeks following North Korea’s threat it could test a hydrogen bomb in the Pacific Ocean. Europe’s Stoxx 600 Index edged lower as a rout in base metals deepened, weighing on mining shares. WTI crude halted its rally above $50 a barrel as OPEC members gathered in Vienna.
    US stock futures pulled back 0.1% though markets were showing growing signs of fatigue over the belligerent U. S.-North Korea rhetoric. ‘North Korea poses such a binary risk that it’s very hard to price, and at the moment investors just have to look through it,’ said Mike Bell, global market strategist at JP Morgan Asset Management. Despite the latest jitters, MSCI’s world equity index remained on track for another weekly gain, holding near its latest record high hit on Wednesday as investors’ enthusiasm for stocks showed few signs of waning.

    This post was published at Zero Hedge on Sep 22, 2017.


  • The Demise of the Dollar: Don’t Hold Your Breath

    So let’s look at currency flows, reserves and debt.
    De-dollarization is often equated with the demise of the dollar, but this reflects a fundamental misunderstanding of the currency markets. The demise of the U. S. dollar has been a staple of the financial media for decades. The latest buzzword making the rounds is de-dollarization, which describes the move away from USD in global payments
    Look, I get it: the U. S. dollar arouses emotions because it’s widely seen as one of the more potent tools of U. S. hegemony. Lots of people are hoping for the demise of the dollar, for all sorts of reasons that have nothing to do with the actual flow of currencies or the role of currencies in the global economy and foreign exchange (FX) markets.
    So there is a large built-in audience for any claim that the dollar is on its deathbed.
    I understand the emotional appeal of this, but investors and traders can’t afford to make decisions on the emotional appeal of superficial claims–not just in the FX markets, but in any markets.
    So let’s ground the discussion of the demise of the USD in some basic fundamentals. Now would be a good time to refill your beverage/drip-bag because we’re going to cover some dynamics that require both emotional detachment and focus.

    This post was published at Charles Hugh Smith on SEPTEMBER 21, 2017.


  • Why I didn’t sell Gold and Silver in 2011

    I’d like to share a personal investment tale with you, the origins of which go back a ways. I became involved in physical precious metals/futures trading in 1972 after reading Harry Browne’s book, How to Profit from the Coming Devaluation.
    Not unlike David Morgan (before we knew each other) I accumulated metal and silver futures contracts, and rode prices into the March 1980 top. I sold my futures, but held the metal until the Hunt Brothers were knocked out of the game after the CRIMEX changed the rules to contract-offset only, collapsing the silver price.
    I watched silver drop through Harry Browne’s “sell if it goes below $37.50” call to $10.80. Then, during a classic 50% retracement to $25, I asked my broker where he though silver would bottom. His answer: “$5.00.” He called it almost to the dollar, but it took a generation to get there.
    In 2000, after buying a one-ounce gold Krugerrand for my daughter’s high school graduation and watching people at her party view it with zero interest, I decided to move back into the sector, focusing on physical metals and mining company shares.
    As the new bull market was getting underway in 2001, I decided to write on a piece of paper the following sentence: “On June 22, 2011, win, lose or draw, I will exit my position in the metals and mining shares.”

    This post was published at GoldSeek on 21 September 2017.


  • SEPT 21/USA YIELD CURVE FLATTENS INDICATING RECESSION: GOES AGAINST THE WISHES OF THE FED/GOLD AND SILVER RAID CONTINUES BY OUR BANKERS WITH GOLD DOWN $19.95 AND SILVER DOWN 29 CENTS/HUGE SANCTIO…

    GOLD: $1292.75 DOWN $19.95
    Silver: $17.00 DOWN 29 CENT(S)
    Closing access prices:
    Gold $1291.60
    silver: $16.97
    SHANGHAI GOLD FIX: FIRST FIX 10 15 PM EST (2:15 SHANGHAI LOCAL TIME)
    SECOND FIX: 2:15 AM EST (6:15 SHANGHAI LOCAL TIME)
    SHANGHAI FIRST GOLD FIX: $1303.97 DOLLARS PER OZ
    NY PRICE OF GOLD AT EXACT SAME TIME: $1299.20
    PREMIUM FIRST FIX: $4.77
    xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx
    SECOND SHANGHAI GOLD FIX: $1302.97
    NY GOLD PRICE AT THE EXACT SAME TIME: $1298.20
    Premium of Shanghai 2nd fix/NY:$4.77
    xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx
    LONDON FIRST GOLD FIX: 5:30 am est $1297.35
    NY PRICING AT THE EXACT SAME TIME: $12.96.08
    LONDON SECOND GOLD FIX 10 AM: $1291.80
    NY PRICING AT THE EXACT SAME TIME. 1291.80
    For comex gold:
    SEPTEMBER/
    NOTICES FILINGS TODAY FOR SEPT CONTRACT MONTH: 29 NOTICE(S) FOR 2900 OZ.
    TOTAL NOTICES SO FAR: 83 FOR 8300 OZ (0.2581 TONNES)
    For silver:
    SEPTEMBER
    225 NOTICES FILED TODAY FOR
    1,125,000 OZ/
    Total number of notices filed so far this month: 6,106 for 30,530,000 oz

    This post was published at Harvey Organ Blog on September 21, 2017.


  • US Threat to Cut China Off from the International Dollar May Be Empty

    Earlier this month, the US threatened to lock China out of the dollar system if it doesn’t follow UN sanctions on North Korea. Treasury Secretary Steven Mnuchin threatened this economic nuclear option during a conference broadcast on CNBC.
    If China doesn’t follow these sanctions, we will put additional sanctions on them and prevent them from accessing the US and international dollar system, and that’s quite meaningful.’
    The threat may be meaningful, but it also might be empty.
    Mnuchin was talking about locking the Chinese out of SWIFT – Society for Worldwide Interbank Financial Telecommunication. The system enables financial institutions to send and receive information about financial transactions in a secure, standardized environment. Since the dollar is the world reserve currency, SWIFT facilitates the international dollar system.

    This post was published at Schiffgold on SEPTEMBER 21, 2017.


  • Stocks and Precious Metals Charts – Not With a Bang, But a Whimper

    ‘Love does not make you weak, because it is the source of all strength, but it makes you see the nothingness of the illusory strength on which you depended before you knew it.’
    Lon Bloy
    Stocks were a little wobbly today, although the VIX continued to be at quite low levels for this year at least.
    The economic news is mixed, as usual.
    The dollar gave a little of yesterday’s sharp rally higher back today. The rally itself was more technical than anything else, given the long decline that it has already seen. Certainly any notions of a hawkish Fed raising rates with enough fortitude to make a difference in the dollar is sheer fantasy.

    This post was published at Jesses Crossroads Cafe on 21 SEPTEMBER 2017.


  • Bill Blain: “Let’s Pretend”

    Blain’s Morning Porridge – Fed Acts, ECB Smoking – but what?
    The Fed acts. Normalisation. Hints of a rate rise in December, confirmation of further ‘data-dependent’ hikes to come next year, and ending the reinvestment of QE income. Exactly as expected – although some say three hikes in 2018 is a bit hostage to the global economy. The effect: Dollar up. Bonds down. Record Stocks. Yellen threw the bond market a crumb when she reminded us low inflation will require a ‘response.’
    Relax. US markets will sweat, but not break. Dollar ascendant.. Yen collapses.. What about Yoorp?
    Not quite as simples in Europe.
    I’m indebted to my colleague Kevin Humphreys on BGC’s Money Market desk for pointing out yet another Northern European central banker with a smug self-satisfied smile on his face this morning.
    Klass Knot (Holland) has been telling us the European reflationary environment is improving to the extent where the tail risk of a deflationary spiral is no longer imminent. He said ‘robust’ economic developments have improved confidence inflation will rise in line with the ECB’s mandated aims. He added the appreciation of the Euro reflects an improving assessment of the EU’s economic success. And, he concludes the ECB should focus on the more important structural and institutional issues facing Europe, rather than the short-term stabilisation and crisis management – WHICH ARE NO LONGER REQUIRED.

    This post was published at Zero Hedge on Sep 21, 2017.


  • Traders Yawn After Fed’s “Great Unwind”

    One day after the much anticipated Fed announcement in which Yellen unveiled the “Great Unwinding” of a decade of aggressive stimulus, it has been a mostly quiet session as the Fed’s intentions had been widely telegraphed (besides the December rate hike which now appears assured), despite a spate of other central bank announcements, most notably out of Japan and Norway, both of which kept policy unchanged as expected.
    ‘Yesterday was a momentous day – the beginning of the end of QE,’ Bhanu Baweja a cross-asset strategist at UBS, told Bloomberg TV. ‘The market for the first time is now moving closer to the dots as opposed to the dots moving towards the market. There’s more to come on that front. ‘
    Despite the excitement, S&P futures are unchanged, holding near all-time high as European and Asian shares rise in volumeless, rangebound trade, and oil retreated while the dollar edged marginally lower through the European session after yesterday’s Fed-inspired rally which sent the the dollar to a two-month high versus the yen on Thursday and sent bonds and commodities lower. Along with dollar bulls, European bank stocks cheered the coming higher interest rates which should help their profits, rising over 1.5% as a weaker euro helped the STOXX 600. Shorter-term, 2-year U. S. government bond yields steadied after hitting their highest in nine years.
    ‘Initial reaction is fairly straightforward,’ said Saxo Bank head of FX strategy John Hardy. ‘They (the Fed) still kept the December hike (signal) in there and the market is being reluctantly tugged in the direction of having to price that in.’
    The key central bank event overnight was the BoJ, which kept its monetary policy unchanged as expected with NIRP maintained at -0.10% and the 10yr yield target at around 0%. The BoJ stated that the decision on yield curve control was made by 8-1 decision in which known reflationist Kataoka dissented as he viewed that it was insufficient to meeting inflation goal by around fiscal 2019, although surprisingly he did not propose a preferred regime. BOJ head Kuroda spoke after the BoJ announcement, sticking to his usual rhetoric: he stated that the bank will not move away from its 2% inflation target although the BOJ “still have a distance to 2% price targe” and aded that buying equity ETFs was key to hitting the bank’s inflation target, resulting in some marginal weakness in JPY as he spoke, leaving USD/JPY to break past FOMC highs, and print fresh session highs through 112.70, the highest in two months, although it has since pared some losses.

    This post was published at Zero Hedge on Sep 21, 2017.


  • How Did Toys “R” Us Implode So Fast? The CEO Explains

    Reviewing first day motions from a company’s chapter 11 docket, and more specifically the CEO’s declaration, can be a great way to learn exactly what happened in the days/weeks leading up to a bankruptcy filing. The company spends millions of dollars every month on expensive lawyers (Kirkland & Ellis in the case of Toys “R” Us), investment bankers (Lazard), turnaround advisors (Alvarez & Marsal), claims administrators, etc., who all spend many sleepless nights in the days leading up to a filing trying to make sure the first day motions are as informative as possible.
    With those high expectations, you can imagine our surprise when we opened the Toys “R” Us CEO’s declaration to find this “preliminary statement”:

    Yes, Kirkland & Ellis was paid $800 an hour (ish) to type up the Toys “R” Us jingle in a court filing. Bravo!

    This post was published at Zero Hedge on Sep 20, 2017.


  • This $700 Billion Public Employee Ticking Time Bomb Is Only 6.7% Funded; Most States Are Under 1%

    We’ve spent a lot of time of late discussing the inevitable public pension crisis that will eventually wreak havoc on global financial markets. And while the scale of the public pension underfunding is unprecedented, with estimates ranging from $3 – $8 trillion, there is another taxpayer-funded retirement benefit that has been promised to union workers over the years that puts pensions to shame…at least on a percentage funded basis.
    Other Post-Employment Benefits (OPEB), like pensions, are a stream of future payments that have been promised to retirees primarily to cover healthcare costs. However, unlike pensions, most government entities don’t even bother to accrue assets for this massive stream of future costs resulting in $700 billion of liabilities that most taxpayer likely didn’t even know existed.
    As a study from Pew Charitable Trusts points out today, the average OPEB plan in the U. S. today is only 6.7% funded (and that’s if you believe their discount rates…so probably figure about half that amount in reality) and many states around the country are even worse.
    States paid a total of $20.8 billion in 2015 for non-pension worker retirement benefits, known as other post-employment benefits (OPEB). Almost all of this money was spent on retiree health care. The aggregate figure for 2015, the most recent year for which complete data are available, represents an increase of $1.2 billion, or 6 percent, over the previous year. The 2015 payments covered the cost of current-year benefits and in some states included funding to address OPEB liabilities. These liabilities – the cost of benefits, in today’s dollars, to be paid in future years – totaled $692 billion in 2015, a 5 percent increase over 2014.
    In 2015, states had $46 billion in assets to meet $692 billion in OPEB liabilities, yielding a funded ratio of 6.7 percent. The total amount of assets was slightly higher than the reported $44 billion in 2014, though the funding ratio did not change. The average state OPEB funded ratio is low because most states pay for retiree health care benefits on a pay-as-you-go basis, appropriating revenue annually to pay retiree health care costs for that year rather than pre-funding liabilities by setting aside assets to cover the state’s share of future retiree health benefit costs.

    This post was published at Zero Hedge on Sep 20, 2017.


  • “If This Trade Doesn’t Work, You Can Blame Me…”

    In July I wrote a piece titled, ‘Is the real US Dollar Pain Trade Lower?’. At the time the US dollar was sucking wind, but many traders were still playing for a bounce. The prevailing wisdom was that the Fed’s tighter monetary policy, combined with Trump’s business acumen, along with a tax reform bill, and topped off with a massive short covering surge from emerging market US dollar denominated issuers, would ensure the two-year US dollar rally would continue.

    This post was published at Zero Hedge on Sep 20, 2017.


  • ‘Hawkish’ Fed Fail? Yield Curve Flattens Most Since 2016 As Dollar Spikes

    More dismal housing data, a VIX 9 handle, and bank stocks ripping higher (despite a big flattening in the yield curve) – just another day in Fed-land…
    Stocks and the long bond unchanged post-Fed, Gold down and dollar up…

    This post was published at Zero Hedge on Sep 20, 2017.


  • SEPT 20/BANKERS SET UP ANOTHER GOLD AND SILVER RAID ON THE CLOWNS FOMC BALANCE RUNOF/YIELD CURVE FLATTENS WITH THE FOMC ANNOUNCEMENT INDICATING FED FAILING POLICY/DEVASTATION IN BOTH MEXICO AND P…

    GOLD: $1312.75 UP $5.25
    Silver: $17.29 UP 5 CENT(S)
    Closing access prices:
    Gold $1300.00
    silver: $17.15
    SHANGHAI GOLD FIX: FIRST FIX 10 15 PM EST (2:15 SHANGHAI LOCAL TIME)
    SECOND FIX: 2:15 AM EST (6:15 SHANGHAI LOCAL TIME)
    SHANGHAI FIRST GOLD FIX: $1316.24 DOLLARS PER OZ
    NY PRICE OF GOLD AT EXACT SAME TIME: $1312.70
    PREMIUM FIRST FIX: $3.54
    xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx
    SECOND SHANGHAI GOLD FIX: $1318.43
    NY GOLD PRICE AT THE EXACT SAME TIME: $1313.85
    Premium of Shanghai 2nd fix/NY:$4.58
    xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx
    LONDON FIRST GOLD FIX: 5:30 am est $1314.90
    NY PRICING AT THE EXACT SAME TIME: $1315.20
    LONDON SECOND GOLD FIX 10 AM: $1311.30
    NY PRICING AT THE EXACT SAME TIME. 1311.80
    For comex gold:
    SEPTEMBER/
    NOTICES FILINGS TODAY FOR SEPT CONTRACT MONTH: 0 NOTICE(S) FOR nil OZ.
    TOTAL NOTICES SO FAR: 54 FOR 5400 OZ (0.1679 TONNES)
    For silver:
    SEPTEMBER
    71 NOTICES FILED TODAY FOR
    355,000 OZ/
    Total number of notices filed so far this month: 5,881 for 29,405,000 oz

    This post was published at Harvey Organ Blog on September 20, 2017.


  • Russia and China’s Golden Plan to Shift Economic Power East

    Russia and China seem to be betting their monetary futures on gold. Their long-term maneuverings could seriously undermine the dominance of the US dollar and shift the world’s economic center of power from West to East.
    Russia and China buy more gold than any other countries in the world, with Russia leading the way. Over the last decade, the the Central Bank of the Russian Federation has added more than 1,250 tons of gold to its reserves, according to the World Gold Council. At 1,700 tons, Russia’s has the sixth largest gold reserves in the world. Russian gold makes up about 17% of the nation’s wealth.
    In 2016 alone, the Russian central bank purchased 201 tons of gold, far more than any other central bank in the world. The People’s Bank of China ranked second, adding 80 tons to its reserves.
    In June 2015, the Chinese central bank announced its gold holdings had grown by 57% to about 1,658 tons. It was the first official update to China’s gold reserves since 2009. Since then, the Chinese have aggressively added to their holdings and taken other steps to increase their influence on the world’s economic stage. Many analysts believe China drastically understates the amount of gold it owns.

    This post was published at Schiffgold on SEPTEMBER 20, 2017.


  • Will The Fed Really ‘Normalize’ It’s Balance Sheet?

    To begin with, how exactly does one define ‘normalize’ in reference to the Fed’s balance sheet? The Fed predictably held off raising rates again today. However, it said that beginning in October it would no longer re-invest proceeds from its Treasury and mortgage holdings and let the balance sheet ‘run off.’
    Here’s the problem with letting the Treasuries and mortgage just mature: Treasuries never really ‘mature.’ Rather, the maturities are ‘rolled forward’ by refinancing the outstanding Treasuries due to mature. The Government also issues even more Treasurys to fund its reckless spending habits. Unless the Fed ‘reverse repos’ the Treasurys right before they are refinanced by the Government, the money printed by the Fed to buy the Treasurys will remain in the banking system. I’m surprised no one has mentioned this minor little detail.
    The Fed has also kicked the can down the road on hiking interest rates in conjunction with shoving their phony 1.5% inflation number up our collective ass. The Fed Funds rate has been below 1% since October 2008, or nine years. Quarter point interest rate hikes aren’t really hikes. we’re at 1% from zero in just under two years. That’s not ‘hiking’ rates. Until they start doing the reverse-repos in $50-$100 billion chunks at least monthly, all this talk about ‘normalization’ is nothing but the babble of children in the sandbox. I think the talk/threat of it is being used to slow down the decline in the dollar.

    This post was published at Investment Research Dynamics on September 20, 2017.