• Tag Archives Money
  • Total Return With Floating Rate Bonds

    News headlines are reporting daily on a pension crisis unfolding in the US. To understand how we got here, there are five major factors that led us to this point:
    Generous payouts Inadequate contributions Low interest rates Longer life spans Overly optimistic return assumptions Lawrence McQuillan detailed how all of these are converging together in one hot mess for America’s largest and most underfunded state when he wrote his must-read book, California Dreaming: Lessons on How to Resolve America’s Public Pension Crisis.
    As he said to us at the time, during a book interview with FS Insider, the money just isn’t there and now politicians are ‘scrambling’:

    This post was published at FinancialSense on 06/23/2017.

  • Get Ready For “QT1”: A First Look At The Fed’s Hidden Policy

    The Federal Reserve is now setting out on a new path for quantitative tightening (QT) after nine years of unconventional quantitative (QE) easing policy. It is the evil twin of QE which was used to ease monetary conditions when interest rates were already zero.
    First, it is important to examine QE and QT in a broader context of the Fed’s overall policy toolkit. Understanding the many tools the Fed has, which of them they’re using and what the impacts are will allow you to distinguish between what the Fed thinks versus what actually happens.
    We have a heavily manipulated system. For years, if not decades, monetary policy has been flipping back and forth between how the economy actually works and what the Fed believes works.
    QE was a policy of printing money by buying securities from primary dealers and to ease monetary conditions when interest rates were at zero. QT takes a different approach.
    In QT, the Fed will ‘sell’ securities to the primary dealers, take the money, and make it disappear. This is an attempt to ultimately reduce the money supply and implement a policy of tightening money.
    There’s a bit of a twist to that selling. Today the Fed’s balance sheet stands at $4.5 trillion. It started at $800 billion in 2008 and has increased over five times that since the crisis. Now they’re going to try to get the balance sheet back to normal levels.

    This post was published at Zero Hedge on Jun 25, 2017.

  • Meet The Money-Laundering, Nigerian Oil Magnate Behind New York’s $50MM Condo Foreclosure

    Last night we noted that yet another luxury condo at Manhattan’s One57 tower, a member of ‘Billionaire’s Row,’ a group of high-end towers clustered along the southern edge of Central Park, had gone into foreclosure – the second in the span of a month. The 6,240-square-foot, full-floor penthouse in question, One57’s Apartment 79, sold for $50.9 million in December 2014, making it the eighth-priciest in the building and likely the largest residential foreclosure in Manhattan’s history.
    According to Bloomberg, the owner of the apartment attempted to conceal his/her identity by using a shell company (you know how those kooky billionaires can be) but was able to obtain an ‘unusually large’ mortgage with an even more unusual term: one-year.
    In September 2015, the company took out a $35.3 million mortgage from lender Banque Havilland SA, based in Luxembourg. The full payment of the loan was due one year later, according to court documents filed in connection with the foreclosure. The borrower failed to repay, and now Banque Havilland is forcing a sale to recoup the funds, plus interest.
    Of course, it was only a matter of time until the mystery man behind Manhattan’s most recent luxury real estate epic fail was exposed. As such, meet Nigerian oil magnate, Kola Aluko.

    This post was published at Zero Hedge on Jun 24, 2017.

  • A Bloody Collapse

    There’s a relatively-common view among certain people, exposed in public by a person who recently registered on my system, claimed to be a retired MD, and promptly got banned.
    He was commenting on my 100 Million Dead article — where I laid out the utter impossibility of what the so-called “health system” has been doing on a fiscal basis for the last 30+ years, and what it proposes to continue to do backed by the people in Congress and the President — screw Americans to the wall with an ever-increasing piece of the total economic picture.
    Why did he get banned? It started here:
    I’m a retired MD and can tell you the current system is a criminal enterprise.
    In other words he admits that the current system is a criminal enterprise to which he was a part.
    It gets better (as if self-stating that his own profession is a criminal enterprise isn’t enough), and that got him banned:
    Tickerguy your timeline on the meltdown is not clear. Why not health care become 30-40% of the economy. We have squandered money on a far worse “noble lie”ie The Cold War.

    This post was published at Market-Ticker on 2017-06-24.

  • Four Reasons Central Banks are Wrong to Fight Deflation

    The word ‘deflation’ can be defined in various ways. According to the most widely accepted definition today, deflation is a sustained decrease of the price level. Older authors have often used the expression ‘deflation’ to denote a decreasing money supply, and some contemporary authors use it to characterize a decrease of the inflation rate. All of these definitions are acceptable, depending on the purpose of the analysis. None of them, however, lends itself to justifying an artificial increase of the money supply.
    The harmful character of deflation is today one of the sacred dogmas of monetary policy. The champions of the fight against deflation usually present six arguments to make their case.1 One, in their eyes it is a matter of historical experience that deflation has negative repercussions on aggregate production and, therefore, on the standard of living. To explain this presumed historical record, they hold, two, that deflation incites the market participants to postpone buying because they speculate on ever lower prices. Furthermore, they consider, three, that a declining price level makes it more difficult to service debts contracted at a higher price level in the past. These difficulties threaten to entail, four, a crisis within the banking industry and thus a dramatic curtailment of credit. Five, they claim that deflation in conjunction with ‘sticky prices’ results in unemployment. And finally, six, they consider that deflation might reduce nominal interest rates to such an extent that a monetary policy of ‘cheap money,’ to stimulate employment and production, would no longer be possible, because the interest rate cannot be decreased below zero.

    This post was published at Ludwig von Mises Institute on 06/22/2017.

  • Jim Rickards Exclusive: Dollar May Become ‘Local Currency of the U.S.’ Only

    Mike Gleason: It is my great privilege to be joined now by James Rickards. Mr. Rickards is editor of Strategic Intelligence, a monthly newsletter, and Director of the James Rickards Project, an inquiry into the complex dynamics of geopolitics and global capital. He’s also the author of several bestselling books including The Death of Money, Currency Wars, The New Case for Gold, and now his latest book The Road to Ruin.
    In addition to his achievements as a writer and author, Jim is also a portfolio manager, lawyer and renowned economic commentator having been interviewed by CNBC, the BBC, Bloomberg, Fox News and CNN just to name a few. And we’re also happy to have him back on the Money Metals Podcast.
    Jim, thanks for coming on with us again today. We really appreciate your time. How are you?
    Choose From 10-100oz Pure Silver Trusted Bullion Dealer – Buy Now! silvergoldbull.com Jim Rickards: I’m fine, Mike. Thanks. Great to be with you. Thanks for having me.
    Mike Gleason: Absolutely. Well first off, Jim, last week, the fed increased the fed funds rate by another quarter of a point as most of us expected, but during that meeting, we also heard Janet Yellen say she wants to normalize the Fed’s balance sheet, which means the Fed could be dumping about $50 billion in financial assets into the marketplace each month. Now you’ve been a longtime and outspoken critic of the fed and their policies over the years. So, what are your thoughts here, Jim? Do you believe they will actually follow through on this idea of selling off more than $4 trillion in bonds and other assets on the Fed’s books? And if so, what do you think the market reaction would be including the gold market?
    Jim Rickards: Well, I do think they’re going to follow through. Of course, it’s important to understand the mechanics of the Fed. They’re actually not going to sell any bonds. But they are going to reduce their balance sheet by probably two to two and a half trillion. So just to go through the history and the math and the actual mechanics there, so prior to the financial crisis of 2008, the Fed’s balance sheet was about $800 billion. As a result of QE1, QE2, QE3, and everything else the fed has done in the meantime, they got that balance sheet up to $4.5 trillion. By the way, if the Fed were a hedge fund, they’d be leveraged 115 to one. They look a really bad hedge fund. But that’s how much the Fed is leveraged, they have about 40 billion of equity, versus 4.5 trillion of assets. Mostly U. S. government securities of various kinds. So, they’re leveraged well over 100 to one.

    This post was published at GoldSilverWorlds on June 23, 2017.

  • Stock Futures Fell This Morning as the Senate Debates Healthcare

    This is a syndicated repost courtesy of Money Morning – We Make Investing Profitable. To view original, click here. Reposted with permission.
    The Dow Jones news today features banks passing a Fed stress test and the Senate debating a new healthcare bill to replace Obamacare. Dow Jones futures are down 27 points this morning while crude oil prices stay near yearly lows.
    Here are the numbers from Thursday for the Dow, S&P 500, and Nasdaq:
    Index Previous Close Point Change Percentage Change Dow Jones 21,397.29 -12.74 -0.06% S&P 500 2,434.50 -1.11 -0.05% Nasdaq 6,236.69 +2.73 +0.04

    This post was published at Wall Street Examiner by Garrett Baldwin ‘ June 23, 2017.

  • When Will the Stock Market Crash Again?

    This is a syndicated repost courtesy of Money Morning. To view original, click here. Reposted with permission.
    The Dow has rocketed 153% higher over the last eight years, making this bull market the second longest in history. But all bull markets end, and with this one nearing record length it’s time to consider whether it will end in a stock market crash.
    While this current bull market has brought triple-digit growth over the last eight years, the Trump rally kicked it into overdrive. The Dow has surged 17% since Election Day, pushing the Dow to a record-breaking run of all-time highs. The Dow’s jump from a record 20,000 points to a new record of 21,000 points was its fastest 1,000-point gain in history.

    This post was published at Wall Street Examiner by Money Morning News Team ‘ June 23, 2017.

  • Proof That This Economic recovery narrative is false

    A hallucination is a fact, not an error; what is erroneous is a judgment based upon it.
    Bertrand Russell
    The financial media has provided reams of data trying to lay out the case that this economic recovery is real. Many of the statistics provided do indeed support the theme that the outlook is improving. One must, however, keep these two facts in mind when looking at the data:
    The Fed poured huge amounts of money into this market. Minus the money, this so-called economic recovery would have never come to pass Due to the low-interest rate environment, corporation borrowed money on the cheap and poured billions into share buybacks since the crash of 2009. Hence, while some of these statistics paint a rosy picture, the outlook is far from rosy as two key leading economic indicators have failed to confirm this recovery from the onset.
    The Baltic Dry index is trading 92% below its all-time high. Now imagine the Dow was in the same position and the press instead of calling it a crash, made the assertion that we were in the midst of a raging bull market. You would think they were insane. Well, the same analogy applies today; this index clearly indicates that there is no recovery on a global basis and that hot money is creating the illusion of one. Remove this excess cash from the system, and the economy together with the stock market will collapse.
    This once highly effective leading economic indicator appears to no longer work as the playing field has been altered. However, it is working, as it is indicating this recovery is nothing but a sham. It can longer be used as a tool to gauge the direction of the stock market or the strength of the economy becaus

    This post was published at GoldSeek on Friday, 23 June 2017.

  • What Derek Carr’s Contract Teaches Us about Wall Street and Income Inequality

    Derek Carr has just signed the most lucrative deal in NFL history, receiving a five-year extension worth $125 million with the soon-to-be Las Vegas Raiders. At $25 million per year, Carr edges out Indianapolis Colts quarterback Andrew Luck (though Luck’s contract did reward him with over twice as much in guaranteed money). Carr also becomes a big winner in the Raiders’ taxpayer-funded escape from Oakland, with his contract scheduled so most of the money kicks in after the franchise moves to income-tax-free Nevada.
    While the structure of Carr’s contract offers another opportunity to discuss the ‘jock tax,’ it also serves to illustrate a more important issue: why Wall Street wins whenever the Fed expands the monetary supply.
    After all consider this: while Derek Carr has certainly proven to be a promising young player at perhaps the most important position in professional sports, he is by no means the most accomplished player at his position or in the NFL. He’s been selected to the Pro Bowl twice, once as an alternate. His career QB rating is beneath players such as Chad Pennington, Carson Palmer, and Colin Kaepernick. Meanwhile he’s led his team to the playoffs once, unfortunately breaking his fibula before he could make a start in the post-season.
    So why, then, is he being rewarded with the NFL’s largest contract?
    The answer itself is fairly obvious: he was due a new deal at a time when the salary cap has never been higher. As such, NFL salaries have more to do about the size of the salary cap when a contract is signed, than it is about the merit of the individual player. Of course, over time Carr’s yearly salary will be used as a starting point with other more accomplished quarterbacks, and the average for the position will gradually rise over time. Matthew Stafford, for example, is likely to sign an even larger contract in the coming months. Salaries league-wide will rise with salary cap inflation.

    This post was published at Ludwig von Mises Institute on June 23, 2017.

  • Gold and Silver Are “Asymmetric” Trades

    An asymmetric trade is a situation where investing a relatively small amount of money holds the potential of yielding a profit many times the amount of the original sum at risk. In other words, where the risk to reward is skewed massively in the direction of reward.
    This took place recently with Bitcoin (BTC). Is this conceptually different from bets made years ago on Microsoft, Cisco, Amazon, or Facebook, which yielded hundreds of percent profit to intrepid investors? Does it have relevance to the possible returns during the next few years for those who hold physical gold and silver?
    I would answer “yes” and “yes.”
    The current “mania” in the cryptocurrency space – most notably BTC and Ethereum (ETH), along with a few other “app coins” – offers an in-future lesson for a similar setup in the precious metals. (For more on the above topic, see “The Blockchain: A Gold and Silver Launchpad?”
    First: This may be the first time ever that an investment “story” has had the ear and investment dollars of a global audience on a simultaneous basis. Individual investors, hedge funds, businesses, and even countries, are sending a torrent of funds, with the effect, to paraphrase Doug Casey’s famous remark, of “trying to push the power of the Hoover Dam through a garden hose.”

    This post was published at GoldSeek on Friday, 23 June 2017.

  • Stock Market Headwinds Approaching, Says Louis-Vincent Gave

    Louis-Vincent Gave, Founding Partner and Chief Executive Officer of Gavekal Research, says there are a number of tailwinds continuing to pushing stock markets higher, though, that story may be about to change, especially as we get closer to 2018.
    What Could Tank Markets?
    There are three fundamental prices that drive markets, Gave stated: the oil price, the US dollar, and US interest rates.
    These three matters over everything else. In the current environment of flat or negative oil prices and flat or declining US dollar valuation, these two serve as a large tailwind for financial assets.
    That leaves the cost of money, or interest rates, as the thing to watch, given that their direction isn’t certain.
    ‘This is the big question confronting investors today,’ Gave said. ‘Do you think that US interest rates – let’s say the 10-year yield – are broadly going to stay between 2.15 and 2.35 and that we’ve reached some kind of stable equilibrium?’

    This post was published at FinancialSense on 06/22/2017.

  • Credit-Card Debt Slaves Move to Top of Fed’s Bank Worries

    Projected losses at the top 34 banks in a ‘severely adverse scenario.’ The comforting news in the results from the Federal Reserve’s annual stress test is that the largest 34 bank holding companies would all survive a recession.
    Based on this glorious accomplishment, the clamoring has already started for regulators to allow these banks to pay bigger dividends and to blow more money on share buybacks, and for these regulators to slash regulation on these banks and make their life easier and riskier in general. We don’t want these banks to survive a recession in too good a condition apparently.
    And it would likely be better for Wall Street anyway if banks could lever up with risks so that a few of them would get bailed out during the next recession. Let’s remember, for the Fed’s no-holds-barred bailout-year 2009, Wall Street executives and employees were doused with record bonuses. The Fed’s bailouts were good for them. And it has been good for them ever since.

    This post was published at Wolf Street on Jun 23, 2017.

  • The ECB Blames Inflation on Everything but Itself

    Unsurprisingly, central banks are reluctant to claim credit for inflation. In their latest bulletin, the European Central Bank (ECB) published the graph below explaining what causes inflation.
    See the problem? Neither the money supply nor the ECB are mentioned. While there are many factors that influence the purchasing power of money, inflation is still inherently a monetary phenomenon and the role central banks play simply can’t be ignored.
    Instead, the ECB prefers to do what all central banks did just before the 2009 great recession: blame inflation on rising food and energy prices. But large central banks like the ECB have a strong and disproportionate effect on energy prices, as predicted by Austrian business cycle theory. The rise in oil prices in 2007, for example, was triggered by the end of the euphoric monetary boom initiated by the Fed and the ECB in the years prior. As investment in energy production was fueled, in part, by credit expansion instead of real savings. The quantity of producer’s goods – or at least of some of them – revealed themselves to be insufficient to complete the plans of entrepreneurs, thus generating a sharp increase in their prices.

    This post was published at Ludwig von Mises Institute on June 23, 2017.

  • Texas Picks Company to Run State Bullion Depository

    The Texas bullion depository took a major step closer to reality last week when officials formally announced the private vendor that will run the 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 undermine the Federal Reserve and its 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 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 – and pay other people through electronic means or checks – in sound money.
    Last Wednesday, Texas Comptroller Glenn Hegar announced Austin-based Lone Star Tangible Assets will build and operate the Texas Bullion Depository. Officials say the facility could open as early as next January.
    The company will initially run the depository out of its current Austin location, and will build a new vault facility in the Austin area. Hegar said customers will not have to travel to Austin in order to utilize the depository. The plan is to establish a branch-like system.

    This post was published at Schiffgold on JUNE 22, 2017.

  • Oil Prices Fall to 10-Month Low as OPEC Mulls an Increase in Production Cuts

    This is a syndicated repost courtesy of Money Morning. To view original, click here. Reposted with permission.
    In Dow Jones news today, oil prices are on track for their worst six-month performance to start a year since 1988. The ongoing to downturn in crude pulled energy stocks and the Dow Jones down on the day. The S&P 500 and Nasdaq remained resilient thanks to another strong performance from technology stocks.
    Here are the numbers from Wednesday for the Dow, S&P 500, and Nasdaq:
    Index Closing Point Change Percentage Change Dow Jones 21,410.03 -57.11 -0.27% S&P 500 2,435.61 -1.42 -0.06% Nasdaq 6,233.95 +45.92 +0.74% Now here’s a closer look at today’s most important market events and stocks, plus Thursday’s economic calendar.

    This post was published at Wall Street Examiner by Garrett Baldwin ‘ June 21, 2017.

  • Millennials’ Savings Rate Climbs For First Time In A Decade

    America’s beleaguered millennials received a rare gift on Tuesday: A scrap of good news. Even with the aggregate student debt burden eclipsing the $1 trillion mark, and wages pressures across the US economy remaining relatively subdued, a new survey from Bankrate.com claims that Americans’ savings habits are improving for the first time in a decade, with the strongest gains recorded among the 18-26 demographic.
    Indeed, after almost a decade, Americans may finally be turning the corner on saving money. More than 30 percent of them say they have enough tucked away to cover six months’ worth of expenses – a seven-year high for this measure of financial calamity preparedness, a financial planning favorite, according to a Bloomberg report on the data.
    ‘Ever since the recession, we’ve noticed in surveys that people realize how important it is to have emergency savings, but for so many years post-recession they just weren’t making any progress,’ said Greg McBride, chief financial analyst at Bankrate.com, which released the survey on Tuesday. Now a broader swath of people are finally making headway, he said.

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

  • Are The ‘Toxic’ Democrats Destined To Become A Permanent Minority Party?

    It has become exceedingly clear that the Democratic Party is in deep trouble. Close to 55 million dollars was spent on the race in Georgia’s sixth congressional district, and that shattered all kinds of records. Democrat Jon Ossoff was able to raise and spend six times as much money as Karen Handel and yet he still lost. This was supposed to be the race that would show the American people that the Democrats could take back control of Congress in 2018, and so for the Democrats this was a bitter failure. The Democratic Congressional Campaign Committee actually injected almost 5 million dollars into the race themselves, and Planned Parenthood threw in another $700,000. But after all of the time, effort and energy that was expended, Handel still won fairly comfortably.
    The Democrats are trying to spin this result as some sort of ‘moral victory’, but as Dan Balz of the Washington Post has pointed out, there are ‘no moral victories in politics’…

    This post was published at The Economic Collapse Blog on June 21st, 2017.