Moments ago, the Bank of Canada’s chief finally said what we had been patiently waiting for over the past several months: admission that Europe’s experiment with negative rates is about to cross the Atlantic. From Market News:
- BOC POLOZ: NOW SEES EFFECTIVE LOWER BOUND FOR POLICY RATE AROUND -0.5%
- BOC POLOZ: CANADN FIN MKTS COULD FUNCTION IN A NEG INT RATE ENVRIONMNT
- BOC POLOZ: ‘SHOULD THE NEED ARISE’ FOR UNCONVENTIONAL MONETARY POLICY, ‘WE’LL BE READY’
That, as they say, is “forward guidance” of what is coming.
And what is coming, is also precisely what Keith Dicker from IceCap Asset Management said in his latest monthly letter, would happen in Canada in the very near future. To wit:
From the article:
“At the beginning of this century Canada held 46.19 tonnes of gold. Now they hold only 2.99 tonnes. That’s a whopping 93.5% decline in gold reserves in just over a decade!”
– Presenting The Worst-Capitalized Central Bank In The West (Hint: Not The Fed) (Sovereign Man, Sep 2, 2014):
As the world’s top central bankers gathered at their annual jamboree recently, the governor of Bank of Canada, Stephen Poloz, undoubtedly received envious comments from his fellow money magicians for Canada’s perceived status as a global financial safe haven.
This newly found perception was perhaps best exemplified during a Bloomberg interview, when the CEO of RBC Wealth Management – the biggest financial institution in Canada said that “Canada is what Switzerland was 20 years ago, and the banks in Canada are what Swiss banks were 20 years ago.”
You can listen to the full interview here:
– Former central banker: “[Bankers] are making it up as they go along. (Sovereign Man, March 3, 2014):
[Editors note: Tim Price, Director of Investment at PFP Wealth Management and frequent Sovereign Man contributor is filling in for Simon today.]
A few weeks ago, William White (former economist at the Bank of England, the Bank of Canada, and Bank of International Settlements) made a frank admission.
And while we search for assets whose prices are less obviously distorted by malign government intervention, it’s refreshing to hear a mea culpa from a member of the economics “profession”.
– The Secret World Of Gold (ZeroHedge, April 21, 2013):
In a wide-ranging look at the history and present of the barbarous relic, CBC’s Ann-Marie MacDonald has gathered many perspectives (pro and con) on gold. The following documentary moves from historical shipwrecks to Nazi ‘death gold’ and England’s war chest to recent years where widespread economic uncertainty has given the yellow metal a “new lustre in the world of high finance.” Valued for its permanence, beauty and scarcity, people will lie, cheat, steal and kill in the name of gold; and the clip provides color on many of the market manipulations of the last few years. As MacDonald says, whether it’s a few gold coins or gold bars stored in one of the many vaults around the world, many investors are taking a shine to gold. But there’s not a lot of it. It is said that, even melted down, there would not be enough to fill an Olympic swimming pool. Some claim that much of the gold held by the Bank of Canada, the Bank of England, the Federal Reserve and Fort Knox is gone – that for every 100 ounces of gold traded, there exists only one ounce of real, physical gold. So, where is the gold – and who really owns it?
– Mark Carney Leaves Canada With ‘Stealth QE’ Rising At Fastest Pace Since 2009 (ZeroHedge, Jan 28, 2013)
YouTube Added: 16.05.2012
– A 12-Year-Old Girl Crushes The Canadian (and American) Dream (ZeroHedge, May 16, 2012):
When Ron Paul stands up in front of a crowd and explains the fictional-reserve banking system’s unreality, some listen, many shrug and bury their heads. When ZeroHedge does the same, comments are heavy but change is slow to come. But when a 12-year-old girl, in a little over five minutes can explain the total farce that is our monetary system, surely people have to listen and break free of the matrix. Victoria Grant, 12, explains how “The banks and the government have colluded to financially enslave the people of Canada,” and as CTV notes, ‘Grant lays out a brief history of the Canadian banking system, referencing obscure historical figures such as former Vancouver mayor Gerald McGeer and explaining that the Bank of Canada held primary control over government lending until the 1970’s. Starting then, she says, governments began borrowing from private banks instead at considerably higher interest rates than those available through the central bank. The result, Grant argues, is a rapidly increasing national debt. The pint-sized pundit is quick to offer a solution. “If the Canadian Government needs money, they can borrow it directly from the Bank of Canada,” she says. ” … Canadians would again prosper with real money as the foundation of our economic structure.” The truth is out there – whether it comes from Alan Simpson, Ron Paul, ZeroHedge, or a 12-year-old Canadian young lady.
– Here Comes The Global, US-Funded Liquidity Bail Out (ZeroHedge, Nov. 30, 2011):
As expected, the Fed has just bailed out the world once again:
- FED, ECB, BOJ, BOE, SNB, BANK OF CANADA LOWER SWAP RATES – BBG
- ECB, FED other major central bank to lower the pricing of existing USD liquidity swaps by 50BPS
And as we have been writing every single day, the worldwide dollar crunch is now confirmed:
- At present, there is no need to offer liquidity in non-domestic currencies other than the U.S. dollar
And finally, a promise to bailout Bank of America when it hits $4.00 again:
- U.S. financial institutions currently do not face difficulty obtaining liquidity in short-term funding markets. However, were conditions to deteriorate, the Federal Reserve has a range of tools available to provide an effective liquidity backstop for such institutions and is prepared to use these tools as needed to support financial stability and to promote the extension of credit to U.S. households and businesses.
This means that the global situation is far, far more dire than the talking heads have said. Luckily, when this step fails, which it will, Mars can always come and bail us out.
For release at 8:00 a.m. EDT
The Bank of Canada, the Bank of England, the Bank of Japan, the European Central Bank, the Federal Reserve, and the Swiss National Bank are today announcing coordinated actions to enhance their capacity to provide liquidity support to the global financial system. The purpose of these actions is to ease strains in financial markets and thereby mitigate the effects of such strains on the supply of credit to households and businesses and so help foster economic activity.
For more than a year, the U.S. Federal Reserve System has been increasingly acting as the world’s central bank, injecting hundreds of billions of dollars into foreign government treasuries in an effort to increase liquidity in those countries.
The foreign central banks have used the U.S. currency to bail out financial institutions within their borders. The Fed program links its balance sheet directly to the fates of foreign central banks at a time when they’re on the ropes.
The program has so far gone unreported in the mainstream media and is a major expansion of Federal Reserve involvement in the global economy. It represents a stark break from the prior role of the Fed, moving it into territory more traditionally occupied by the International Monetary Fund (IMF).
A security officer stands outside of the Federal Reserve building in Washington on Sept. 16, 2008. Photographer: Jay Mallin/Bloomberg News
Oct. 8 (Bloomberg) — The Federal Reserve, European Central Bank and four other central banks lowered interest rates in an unprecedented coordinated effort to ease the economic effects of the worst financial crisis since the Great Depression.
The Fed, ECB, Bank of England, Bank of Canada and Sweden’s Riksbank each cut their benchmark rates by half a percentage point. The Bank of Japan, which didn’t participate in the move, said it supported the action. Switzerland also took part. Separately, China’s central bank lowered its key one-year lending rate by 0.27 percentage point.
Today’s decision follows a global meltdown that sent U.S. stock indexes heading for their biggest annual decline since 1937; Japan’s benchmark today had the worst drop in two decades. Policy makers are also aiming to unfreeze credit markets after the premium on the three-month London interbank offered rate over the Fed’s main rate doubled in two weeks to a record.
Sept. 18 (Bloomberg) — The Federal Reserve almost quadrupled the amount of dollars central banks can auction around the world to $247 billion in a coordinated bid to ease the worst crisis facing financial markets since the 1920s.
The Fed increased the amount of dollars that the European Central Bank, the Bank of Japan and other counterparts can offer from $67 billion “to address the continued elevated pressures in U.S. dollar short-term funding markets.” The Bank of England, the Bank of Canada and the Swiss National Bank also participated.
Policy makers have struggled to revive confidence in markets this week as investors stockpiled money on concern more financial institutions would fail after the bankruptcy of Lehman Brothers Holdings Inc. and the U.S. government bailout of American International Group Inc. The cost to hedge against losses on U.S. government debt climbed to a record yesterday.
“There’s a complete lack of faith in the markets,” said Jim O’Neill, chief economist at Goldman Sachs Group Inc. in London. “There’s a lot of cash hoarding and people losing trust in banks, so the central banks are acting to relieve that. This might not be the last time they have to act.”
World central banks unite to ease credit strain
WASHINGTON (Reuters) – The U.S. Federal Reserve and four other central banks on Tuesday teamed up to get hundreds of billions of dollars in fresh funds to cash-starved credit markets, allowing financial firms to use securities backed by home mortgages as collateral for central bank loans.
Stocks surged, bonds fell and the long-suffering U.S. dollar soared in reaction to the moves, a sign financial markets saw the plan as a step in the right direction to ease a crisis that has threatened world economic growth. The Dow Jones industrials closed nearly 3.6 percent higher.
In the latest effort to ease a credit contraction that has disrupted global finance, the Fed, Bank of Canada, Bank of England, European Central Bank and Swiss National Bank announced a series of aggressive measures to boost liquidity. It was the second time in three months that central banks from around the globe had launched coordinated efforts.
Wall Street economists were quick to call the new lending facility a step in the right direction, but what’s most needed is time for the de-leveraging of billions of dollars in loans globally.