• Tag Archives Federal Reserve
  • Another Step Forward for Sound Money: Location Picked for Texas Gold Depository

    The Texas Bullion Depository took a step closer becoming operational earlier this month when officials announced the location of the new facility. The creation of a state bullion depository in Texas represents a power shift away from the federal government to the state, and it provides a blueprint that could ultimately end the Federal Reserve’s monopoly on money.
    Gov. Greg Abbot signed legislation creating the state gold bullion and precious metal depository in June of 2015. The facility will not only provide a secure place for individuals, business, cities, counties, government agencies and even other countries to store gold and other precious metals, the law also creates a mechanism to facilitate the everyday use of gold and silver in business transactions. In short, a person will be able to deposit gold or silver in the depository and pay other people through electronic means or checks – in sound money.
    Earlier this summer, Texas Comptroller Glenn Hegar announced Austin-based Lone Star Tangible Assets will build and operate the Texas Bullion Depository. On Nov. 3, the company announced it will construct the facility in the city of Leander, located about 30 miles northwest of Austin. According to the Community Impact Newspaper, the Leander City Council has approved an economic development agreement with Lone Star. Construction of the depository is expected to begin in early 2018. Lone Star officials say it will take about a year to complete construction of the 60,000-square-foot secure facility located on a 10-acre campus.

    This post was published at Schiffgold on NOVEMBER 16, 2017.


  • Thompson Reuters GFMS Outlook: Gold Above $1,400 in 2018

    Analysts at Thomson Reuters expect the price of gold to push back over $1,300 and then continue to rise above $1,400 through next year, primarily driven by overvalued stock markets, according to the GFMS Gold Survey 2017 Q3 Update and Outlook.
    Gold briefly broke through the key $1,300 level in late August. Safe-haven buying served as a key driver, as heated rhetoric between the US and North Korea was at a peak late last summer. But gold fell back below $1,300 and has traded within a tight range over the last few weeks as investors mull future Federal Reserve moves and the impact of GOP tax reform – if Congress can get it done. Lackluster investment demand in the West, particularly North America, has also led to a supply surplus.
    Thompson Reuters analysts say the initial push above $1,300 was an overextension of the price at the time, and they call the drop back below that level ‘a healthy correction for the price that has formed a base for a more sustainable move above $1,300 later this year.’

    This post was published at Schiffgold on NOVEMBER 16, 2017.


  • Retail Sales (US) Are Exhibit #1

    In January 2016, everything came to a head. The oil price crash (2nd time), currency chaos, global turmoil, and even a second stock market liquidation were all being absorbed by the global economy. The disruptions were far worse overseas, thus the global part of global turmoil, but the US economy, too, was showing clear signs of distress. A manufacturing recession had emerged which would only ever be the case on weak demand.
    But the Fed just the month before had finally ‘raised rates’ for the first time in a decade, though after procrastinating all through 2015. Still, surely these wise, proficient technocrats wouldn’t be so careless and clueless as to act in this way during a serious downturn. After all, what are ‘rate hikes’ but the central bank’s shifting concerns toward a faster economy perhaps reaching the proportions of overheating.
    The dissonance was striking, nowhere more so than at the Federal Reserve itself. On the day the FOMC voted for the first of what was supposed to be (by now) ten to fifteen increases (not just four) the central bank also released estimates on US Industrial Production that were negative year-over-year, a condition that just doesn’t happen outside of either a recession or a condition very close to one.
    The mainstream sided easily and eagerly with the technocrats. Even as the Fed failed to act month after month, the word ‘transitory’ printed prominently in each article rationalizing why a manufacturing recession just wouldn’t matter, the media would claim how ‘strong’ and ‘resilient’ especially US consumers were.

    This post was published at Wall Street Examiner on November 15, 2017.


  • The Fed’s Bubblenomics

    The Following is adapted from a preface to a new report by Murray Sabrin, featured in his November 15 presentation, “Bubblenomics” at Ramapo College.]
    If you Google ‘dot com bubble,’ you will get nearly 1.2 million hits, and 3.3 million hits if you Google ‘tech bubble.’ A Google search of ‘housing bubble’ will return nearly 11 million hits. (The searches were conducted on March 29, 2017). And if you search Amazon books for financial crisis 2008 you will get more than 1200 hits.
    Given all the books, monographs, essays, articles, and editorials that have been written about back-to-back bubbles that occurred within two decades, one would think there would be nothing else to write about.
    The purpose of this book is to present to the general public, my fellow academicians and policymakers with an brief account and review of one of the most turbulent periods in United States history without the usual jargon academics are noted for.
    As the two quotes from the Federal Reserve’s website above reveal, the Fed has been given the responsibility by the Congress of the United States to essentially promote sustainable prosperity, stabilize prices and maximize employment. During the past 100 years of the Federal Reserve’s operations, the economy has grown substantially (see Figure 1 for data since 1929), but the path to higher living standards have been interrupted by depressions/ recessions, a few bouts with double-digit price inflation and occasionally widespread unemployment. Although the Congress has expected the Federal Reserve to be a wise and prescient ‘helmsman,’ navigating the economy from becoming overheated or plunging into a recession or worse, the Fed’s track record belies its mandates.

    This post was published at Ludwig von Mises Institute on 11/15/2017.


  • Japan’s Plea To Millennials: Please Buy Stocks

    Ever since the Federal Reserve first got into the business of blowing massive equity bubbles back in the 1980’s, Americans have shown a willingness to happily, if ignorantly, embrace each successive iteration to the rigged market. Of course, as E-Trade recently confirmed via the following ad, making money in equities is a very simple two-step process: (1) get invested, (2) buy a yacht made of Cuban mahogany and party with models…why would anyone in their right mind pass that up?
    ***
    Unfortunately, at least for the central planners at the Bank of Japan who would love to be as efficient at creating asset bubbles as their U. S. counterparts, Japanese investors have a slightly longer memory than U. S. investors and have shunned stocks ever since an entire generation of wealth was wiped out in the 90’s. After 20 years of stocks pretty much only trading in one direction, one can understand their concern.

    This post was published at Zero Hedge on Nov 14, 2017.


  • Debt, Taxes and Politics: An Updated Perspective on Federal Tax History

    With the Republican tax bill looming, we’ve updated this article to include the latest figures and estimates for federal debt and taxes.
    Federal debt is defined as “the gross outstanding debt issued by the United States Department of Treasury since 1790” according to It does not include state and local debt, agency debt, nor entitlement programs such as Medicare and Social Security. It does include debt held by the public, debt held in government accounts, and by the Federal Reserve Board. Current federal debt per person is $62,814.
    The first chart is a snapshot of federal debt with government forecasts through 2022 with an overlay of tax brackets since the onset of annual federal taxation in 1913.
    As the chart clearly illustrates, the tax cuts in the early 1980s coincided with the beginning of an acceleration in real federal debt from a relatively consistent level over the previous three decades.

    This post was published at FinancialSense on 11/14/2017.


  • White House Considering Mohamed El-Erian For Fed Vice Chair

    In what will come as a big surprise to many Fed watchers, moments ago the WSJ reported that among other candidates, Mohamed El-Erian, former deputy director of the IMF, former head of the Harvard Management Company, Bill Gross’ former partner at Pimco until the duo’s infamous falling out, and one of the few people who – together with John Taylor – actually deserve the nomination, is being considered for the Fed Vice Chairman role. DJ also added that Kansas banking regulator Michelle Bowman is also being considered. From the WSJ:
    The White House is considering economist Mohamed El-Erian as one of several candidates to potentially serve as the Federal Reserve’s vice chairman, according to a person familiar with the matter.
    The process of selecting the Fed’s No. 2 official began this month after President Donald Trump nominated Fed governor Jerome Powell to succeed Fed Chairwoman Janet Yellen when her term expires next February.
    The WSJ adds that there is a broad range of candidates under consideration for post, and that the White House will focus on monetary policy experience for post.

    This post was published at Zero Hedge on Nov 14, 2017.


  • Stockman: US Entry Into World War I Was A Disaster

    103 years ago, in 1914, the Federal Reserve opened-up for business as the carnage in northern France was getting under way.
    ***
    And it brought to a close the prior magnificent half-century era of liberal internationalism and honest gold-backed money.
    The Great War was nothing short of a calamity, especially for the 20 million combatants and civilians who perished for no reason discernible in any fair reading of history, or even unfair one.
    Yet the far greater calamity is that Europe’s senseless fratricide of 1914-1918 gave birth to all the great evils of the 20th century – the Great Depression, totalitarian genocides, Keynesian economics, permanent warfare states, rampaging central banks and the follies of America’s global imperialism.

    This post was published at Zero Hedge on Nov 13, 2017.


  • Philly Fed President Unconvincing As He “Lightly” Pencils In December Hike

    Speaking in at a conference in Tokyo, the head of the Philly Fed, Patrick Harker said that he has penciled in a further rate hike by the Fed at its December meeting on 12-13 December 2017. However, his use of the word ‘lightly’ suggested that there may be a degree of wavering on his part. According to Reuters.
    A Federal Reserve official said on Monday he expects to back an interest rate hike next month despite caution over low-inflation, as U. S. central bank policy needs to be positioned to deal with future economic shocks.
    Philadelphia Fed President Patrick Harker said he has ‘lightly penciled in’ a December rate hike. However, he flagged he had slightly less conviction about the policy decision than he had last month as he ‘continues to elicit caution’ about weak inflation and also about the way in which it is measured. Harker said he expects the Fed to raise rates three times next year as long as inflation remains on track, and the projected tightening could take policy to what he would describe as a neutral stance. Harker, a centrist voter on the Fed’s monetary policy committee this year under an internal rotation, said the Fed must continue normalizing policy as the economy is ‘more or less at full strength’ and there remains ‘very little slack’ in the labor market. ‘Removing accommodation is the right next step for a few reasons,’ he said in prepared remarks to a Global Interdependence Center conference in Tokyo…

    This post was published at Zero Hedge on Nov 13, 2017.


  • Credit Card Losses: How High Can They Go?

    According to data from the Federal Reserve, US consumer credit grew by 5.5% annualized during Q3 the fastest quarterly pace this year. Credit now tops $1 trillion after a multi-year splurge by consumers on auto debt funded by rock-bottom interest rates and relaxed lending criteria. However, now that interest rates are starting to rise again, investors, analysts, and banks are beginning to vent concerns about the state of the American consumers’ balance sheet and credit card losses are among the largest of those concerns, but maybe there is some room for optimism on that front?
    Credit Card Losses Rising
    Banks have enjoyed years of declining losses from fewer consumers defaulting on debts, but this trend is now starting to reverse. Synchrony Financial was the first major issuer to issue a profit warning on rising losses earlier this year when it announced first quarter provisions for loan losses surged 21% to $1.3 billion compared with the prior quarter — $300 million more than expected. Management expects the write-off rate for the full year to be around 5% or slightly higher according to Bloomberg.
    Citi came next reporting $1.2 billion in losses at its consumer lending business in North America for the third quarter. Most of the losses stemmed from its credit cards division. To add insult to injury, management set aside a further $500 million to cover additional losses. At the same time Citi announced its losses, JP Morgan also told investors that it was increasing provisions for unsecured credit losses.

    This post was published at FinancialSense on 11/10/2017.


  • Asian Metals Market Update: November-10-2017

    The US dollar weakened and gold rose on suspicion that Trump’s tax cut proposal could see modifications. The next seven days is filled with market moving US economic data releases. The answer which investors will be looking for is what next after the expected December interest rate hike by the Federal Reserve. I am looking into global inflation/deflation targets for next year. Energy price trend will play a key role in inflation direction next year. The big challenge is to judge the pace of rise of crude oil prices and not the actual rise. At the moment the bottom for crude oil looks at $42 and top at $86+ in the next twelve months.
    Developments in bitcoins and block chain technology are being closely watched.

    This post was published at GoldSeek on 10 November 2017.


  • Stocks and Precious Metals Charts – The Repairer of Reputations

    “A growing economy with related worries about increases in future inflation would typically produce rising yields on longer-term notes and bonds, not declining yields. A dramatic flattening in the yield curve is seen as a red flag for an economic slowdown, sagging inflation and as a potential precursor to the onset of recession. None of that would be consistent with the Federal Reserve continuing to tighten interest rates – which it is expected to do again in December.”
    Pam and Russ Martens, Does Jay Powell Hear the Alarm Bells From a Flattening of the Yield Curve<

    ‘The ambition of Caesar and of Napoleon pales before that which could not rest until it had seized the minds of men and controlled even their unborn thoughts.’
    Robert W. Chambers, The King In Yellow: Repairer of Reputations
    We *almost* had a correction in the US equity markets today. Imagine that!
    However, crisis was averted as determined buying of the SP 500 futures stepped in this afternoon after the European traders went home to their schatzies.

    This post was published at Jesses Crossroads Cafe on 09 NOVEMBER 2017.


  • The Stock Market Has Gone Up More Than 5 Trillion Dollars Since Donald Trump Was Elected

    One year ago we witnessed the greatest miracle in political history, and since that time we have also witnessed one of the greatest miracles in financial history. On November 8th, 2016 the Dow closed at 18,332.74. On Wednesday, it closed at 23,563.36. U. S. stocks have increased in value by about 5.4 trillion dollars since Donald Trump was elected, and I don’t think that we have seen anything quite like this ever before. So does Donald Trump deserve the credit for this unprecedented stock market run? Many experts are at least giving him part of the credit…
    Greg Valliere, chief global strategist at Horizon Investments, says outgoing Federal Reserve chair Janet Yellen deserves ‘much of the credit’ because the Fed’s policy of low interest rates has helped maintain a good economy and ‘favors stocks over other investments.’
    But Trump, he adds, ‘gets some credit for establishing a pro-business climate in Washington.’ Trump also gets kudos for rolling back business regulations and pushing for a big tax cut for U. S. corporations, which investors say will boost corporate profitability.
    Without a doubt, a Trump victory was a good thing for the financial markets, but politicians need to be careful not to take too much credit for soaring stock prices.
    Because if they take credit when stocks go up, then they also have to be willing to take the blame when they go down.

    This post was published at The Economic Collapse Blog on November 8th, 2017.


  • Short-Volatility Funds Are Being Flooded With Cash (VIX Evaporating)

    The SPX volatility index VIX is near an all-time low as The Federal Reserve attempts to raise their target rate and unwind their $4.46 trillion balance sheet. The question remains as to how further rate increases and balance sheet unwinding will impact equity volatility.
    (Bloomberg) Exchange-trade products betting that volatility will sink lower have never been more popular.
    Even as the CBOE Volatility Index plunges to its lowest on record and U. S. stocks march to fresh highs, investors have continued to give the short-volatility trade their vote of confidence this year. With $2.4 billion in assets, short volatility exchange-traded funds are backed by the most cash on record, according to data compiled by Bloomberg.

    This post was published at Wall Street Examiner on November 7, 2017.


  • US Consumer Debt Continues to Balloon

    Last summer, US Global Investors CEO Frank Holmes called debt ‘the mother of all bubbles.’ That bubble continues to blow up.
    US consumer debt increased even more than expected in September. According to data released by the Federal Reserve, total credit rose by $20.8 billion, an annualized rate of 6.6%. Analysts had expected an increase in the neighborhood of $18 billion. It was the largest increase in overall consumer indebtedness since last year’s holiday season.
    Credit card spending helped drive overall consumer debt higher. Revolving credit rose by $6.3 billion in September, on the heels of a $5.6 billion increase in August. Total credit card debt in the US has now surged past the $1 trillion mark.
    Non-revolving debt, the category that includes auto and student loans, also pushed higher. According to a Bloomberg report, a jump in motor vehicle purchases as consumers replaced vehicles damaged by Hurricanes Irma and Harvey drove up debt in the category. Loans for motor vehicles rose by $19.3 billion in the third quarter of this year.

    This post was published at Schiffgold on NOVEMBER 8, 2017.


  • 700 Years Of Data Suggests The Reversal In Rates Will Be Rapid

    Have we been lulled into a false sense of security about the future path of rates by ZIRP/NIRP policies? Central banks’ misguided efforts to engineer inflation have undoubtedly been woefully feeble, so far. As the Federal Reserve ‘valiantly’ raises short rates, markets ignore its dot plot and yield curves continue to flatten. And thanks to Larry Summers, the term ‘secular stagnation’ has entered the lexicon. While it sure doesn’t feel like it, could rates suddenly take off to the upside?
    ***
    A guest post on the Bank of England’s staff blog, ‘Bank Underground’, answers the question with an unequivocal yes. Harvard University’s visiting scholar at the Bank, Paul Schmelzing, normally focuses on 20th century financial history. In his guest post (see here), he analyses real interest rates stretching back a further 600 years to 1311. Schmelzing describes his methodology as follows.

    This post was published at Zero Hedge on Nov 8, 2017.


  • A Bullish Gold Price Prediction for December 2017

    The gold price has remained flat over the last two weeks, with daily movement last week mostly alternating between gains and losses. However, the metal eventually ended the week with a small 0.2% loss.
    U. S. President Donald Trump announcing on Nov. 2 that Jerome ‘Jay’ Powell would be the next Federal Reserve chair wasn’t even enough to boost gold prices. Perhaps it’s because Powell – widely known as neither hawkish nor dovish when it comes to interest rates – likely won’t do anything unexpected in his new position.
    For now, that’s kept the stock market humming higher, with the Dow Jones up 0.5% since Thursday’s announcement. Another factor pushing stocks up has been the expected Fed rate hike in December, which economists predict has a 96.7% chance of happening.
    However, I don’t expect a December rate hike to happen.

    This post was published at Wall Street Examiner on November 6, 2017.


  • ‘The Curious Case Of The Missing Defaults’ – Carmen Reinhart Fears What Happens Next

    Usually, a sudden stop in capital inflows sparks a currency crash, sometimes a banking crisis, and quite often a sovereign default. Why, then, has the worldwide incidence of sovereign defaults in emerging markets risen only modestly?
    ***
    Booms and busts in international capital flows and commodity prices, as well as the vagaries of international interest rates, have long been associated with economic crises, especially – but not exclusively – in emerging markets. The ‘type’ of crisis varies by time and place. Sometimes the ‘sudden stop’ in capital inflows sparks a currency crash, sometimes a banking crisis, and quite often a sovereign default. Twin and triple crises are not uncommon.
    The impact of these global forces on open economies, and how to manage them, has been a recurring topic of discussion among international policymakers for decades. With the prospect of the US Federal Reserve raising interest rates in the near and medium term, it is perhaps not surprising that the International Monetary Fund’s 18th Annual Research Conference, to be held on November 2-3, is devoted to the study and discussion of the global financial cycle and how it affects cross-border capital flows.
    Rising international interest rates have usually been bad news for countries where the government and/or the private sector rely on external borrowing. But for many emerging markets, external conditions began to worsen around 2012, when China’s growth slowed, commodity prices plummeted, and capital flows dried up – developments that sparked a spate of currency crashes spanning nearly every region.

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


  • GOP Tax Plan Increases the Most Insidious Tax

    Last Thursday, congressional Republicans unveiled their tax reform legislation. On the same day, President Trump nominated current Federal Reserve Board Governor Jerome Powell to succeed Janet Yellen as Federal Reserve chair. While the tax plan dominated the headlines, the Powell appointment will have much greater long-term impact. Federal Reserve policies affect every aspect of the economy, including whether the Republican tax plan will produce long-term economic growth.
    President Obama made history by appointing the first female Fed chair. President Trump is also making history: If confirmed, Powell would be the first former investment banker to serve as chairman of the Federal Reserve. Powell’s background suggests he will continue Janet Yellen’s Wall Street-friendly low interest rates and easy money policies.
    Powell is an outspoken opponent of the Audit the Fed legislation. In 2015, Powell delivered an address at Catholic University devoted to attacking Audit the Fed. Like most Fed apologists, Powell claims the audit would compromise the Fed’s independence and allow Congress to control monetary policy. However, like all who make this claim, Powell cannot point to anything in the text of the audit bill giving Congress any power over the Federal Reserve. Powell’s concerns about protecting the Fed’s independence are misplaced, as the Fed has never been free of political influence. The Fed has a long history of bowing to presidential pressure to tailor monetary policy to help advance the president’s political and policy agenda.

    This post was published at Ludwig von Mises Institute on November 6, 2017.


  • Ron Paul Rages: GOP Plan Increases The Most Insidious Tax

    Last Thursday, congressional Republicans unveiled their tax reform legislation. On the same day, President Trump nominated current Federal Reserve Board Governor Jerome Powell to succeed Janet Yellen as Federal Reserve chair.
    While the tax plan dominated the headlines, the Powell appointment will have much greater long-term impact. Federal Reserve policies affect every aspect of the economy, including whether the Republican tax plan will produce long-term economic growth.
    President Obama made history by appointing the first female Fed chair. President Trump is also making history: If confirmed, Powell would be the first former investment banker to serve as chairman of the Federal Reserve. Powell’s background suggests he will continue Janet Yellen’s Wall Street-friendly low interest rates and easy money policies.

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