With the Federal Reserve printing trillions upon trillions of dollars to keep the economic system afloat, many investors and financial pundits have surmised that the fundamental economic problems facing the United States during the crash of 2008 have been resolved. Stocks are, after all, at historic highs.
But the insiders know different. And if there’s any single person out there who understands U.S. monetary policy and its long-term effects on domestic and global affairs it’s former Federal Reserve chairman Alan Greenspan. As the head of the world’s most powerful central bank for nearly two decades he’s privy to the insider conversations and government machinations that have brought us to where we are today. Continue reading »
Every two weeks or so on average, we ask ourselves: why do central bankers only tell the truth after they have quit their post (rhetorically, of course). The last time it was the BOE’s former head Mervyn King, who said that “more monetary stimulus will not help the world economy return to strong growth.” This took place long after the BOE, under his watch, unleashed its own QE back in the early days of the great financial crisis. Another example: back in November, the Fed’s own former head, the person who single-handedly unleashed the great moderation and led to the current terminal financial state where the global economy bounces from one bubble to another even bigger bubble or else everything implodes, Alan Greenspan said “Gold Is Currency; No Fiat Currency, Including the Dollar, Can Match It.”
It was another statement by the maestro that has caught the world’s attention, this time opining on Greece, when he told BBC Radio’s the World This Weekend that “Greece will leave the Eurozone. I don’t see that it helps Greece to be in the Euro, and I certainly don’t see that it helps the rest of the Eurozone. It’s just a matter of time before everyone recognizes that parting is the best strategy.… At this stage I don’t see any people who are willing to put up the funds for Greece… All the cards are being held by the members of the Eurozone.” Naturally, this is just what anyone with a functioning frontal lobe (which immediatley excludes all tenured economists) would have said 5 years ago. Continue reading »
Three months ago, we wrote “How The Petrodollar Quietly Died, And Nobody Noticed“, in which we explained in painful detail why far from the simple macroeconomic dogma which immediately prompted the macro tourists to scream that “oil prices dropping are good for US consumers“, the collapse in the price of crude is not only a disaster for oil exporting nations – one which will lead to a series of violent “Arab Springs” across the oil-producing developed world – but far more importantly, have a massive impact on capital markets as a result of the plunge in the most financialized commodity in history. Continue reading »
The head of China’s Dagong Rating Agency, Guan Jianzhong, had some very blunt words for the world’s investors and policymakers overnight. As ITAR-TASS reports, Jianzhong warned , “the world economy may slip into a new global financial crisis in the next few years… that is even worse than in 2008.”Continue reading »
In the early 1970s, there were about 200,000 new US businesses created each year (net of closures). Now, the number is negative. Why are Americans getting poorer?Look no further. No new businesses (net). No new jobs (again net). No new wealth. Under Obama and Draghi, crony capitalism flourishes. Real capitalism dies.
Three weeks ago, when reporting on Obama’s close personal friend and Bank of Hawaii “community banker” appointee to the Fed board, Allan Landon, we emphasized an apparently trivial data point that had somehow managed to slip through the background due diligence process. Namely, that about a decade ago, the same Landon stepped down as board member from the Seattle Federal Home Loan Bank after he was found to have “failed to comply with a rule requiring the disclosure of conflicts of interest by a director by failing to make disclosure to the Seattle Bank board of their institutions’ planned redemptions.” The full story can be read here, but in a nutshell a banker that the president himself has appointed to join the US money printing authority was on the cusp of being investigated for embezzlement, and was forced to quietly disappear into the night despite denying “any wrongdoing.” Today we learn just how much assets the banker who at least once was caught with “borderlineembezzlement ” made during his humble tenure as a “community banker.” The number: somewhere between $10 and $40 million.
With Fed mouthpiece Jon Hilsenrath warning - in no lesser status-quo narrative-deliverer than The Wall Street Journal - that The ECB’s actions (and pre-emptive collapse in the EUR) means the U.S. economy must deal with a rapidly strengthening dollar that will make American goods more expensive abroad, potentially slowing both U.S. growth and inflation; and Treasury Secretary Lew coming out his crypt to mention “unfair FX moves,” it appears The Fed (and powers that be) are worrying about King Dollar. This suggests, as Mises Canada’s Patrick Barron predicts, the Fed will start charging negative interest rates on bank reserve accounts as the final tool in the war on savings and wealth in order to spur the Keynesian goal of increasing “aggregate demand”. If savers won’t spend their money, the government will take it from them.
The European Central Bank’s launch of an aggressive program this week to buy more than €1 trillion in bonds poses important tests for the U.S. economy and the Federal Reserve.
Europe’s new program of money printing—and the resulting fall in the euro—means the U.S. economy must deal with a rapidly strengthening dollar that will make American goods more expensive abroad.Continue reading »
Draghi’s answer is simple: we have now thrown the kitchen sink at the deflation problem and there has been no inflation (he conveniently forgets to mention that the world is now caught in a vicious spiral in which every single central bank is printing money just to export deflation to its peers, with more and more printing necessary each year just to stay in one place). In other words, just because hyperinflation hasn’t materialized so far, it never will.
*DRAGHI SAYS TODAY’S MEASURES WILL BOLSTER INFLATION
*DRAGHI CITES SIGNALING EFFECT ON INFLATION EXPECTATIONS
“Different this time?” or “Einsteinian Insanity”?
With The ECB set to announce a QE4EVA-esque bond-buying initiative within the next hour or two, we thought it worth looking at just what The Fed’s balance-sheet experiment did for inflation expectations (the key narrative that is driving Draghi’s decision) and economic growth (what every politician is demanding Draghi help with)…
Axel Weber says it is “hard to say” whether Europe would be in better shape today if the euro had never been launched, a tactful evasion understood as nostalgia for the stability of the D-Mark
The former head of the German Bundesbank has warned that the European Central Bank (ECB) will not succeed in raising inflation for years to come and is almost powerless to revive the fortunes of the eurozone on its own.
Axel Weber, now chairman of UBS and widely-regarded as Europe’s most influential private banker, said Europe’s leaders had squandered the chance to rebuild the eurozone’s foundations when the going was good and markets were calm.Continue reading »
Yesterday, to much fanfare, the White House blasted that it was Obama’s desire to appoint Allan R. Landon, a Hawaiian community banker, to serve on the Board of Governors of the Federal Reserve System. To wit: “President Obama said, “Allan Landon has the proven experience, judgment and deep knowledge of the financial system to serve at the Federal Reserve during this important time for our economy. He brings decades of leadership and expertise from various roles, particularly as a community banker. I’m confident that he will serve our country well.”
Fed Chair Janet Yellen pushed for him to be her No. 2 in a move that was viewed as a show of confidence and strength as she prepares to lead the Fed through one of it most challenging periods, managing the wind down of massive stimulus programs put in place following the financial crisis.
After years of being blocked by Democratic leader Harry Reid, The Washington Times reports, the Senate will finally get a chance next year to vote on legislation to force a broad audit of the Federal Reserve’s decision-making. Ron Paul’s flagship legislative efforts have been picked up by his son and now has the backing of the leader of the new Republican majority, Sen. Mitch McConnell, whose office says the legislation will earn a floor vote. While the bill is not a sure thing, it appears to have The Fed worried as Reuters reports, Yellen and other Fed officials are lobbying Capitol Hill to drop the audit push.
As The Washington Times reports,
After years of being blocked by Democratic leader Harry Reid, the Senate will finally get a chance next year to vote on legislation to force a broad audit of the Federal Reserve’s decision-making. Continue reading »
A few weeks ago, we reported that for some still unexplained reason, the US Treasury is ordering “survival kits” to its employees overseeing the federal banking system. To wit:
The Department of Treasury is spending $200,000 on survival kits for all of its employees who oversee the federal banking system, according to a new solicitation. As FreeBeacon reports, survival kits will be delivered to every major bank in the United States and includes a solar blanket, food bar, water-purification tablets, and dust mask (among other things). The question, obviously, is just what do they know that the rest of us don’t?
We still don’t know why. But what makes things even more surprising, and confusing, is that two days before the survival kit RFP soliciation became public on December 4, 2014, a just as curious notice was blasted by the Fed’s recruiting Twitter account:
Exactly one month ago we observed that, as expected in the aftermath of the Netherlands’ shocking and still not fully-explained gold repatriation from the NY Fed, the amount of foreign earmarked gold on deposit with the Fed had just experienced a 42 ton withdrawal: the single largest outflow of gold held at the NY Fed in over a decade, going back all the way to 2001. This had brought the total amount of YTD gold withdrawals from the NY Fed to a whopping 119 tons: the most since the Lehman collapse.
However, because this total was insufficient to cover just the Dutch repatriation of gold from the NY Fed (which amounted to 122 tons), we knew there would be more activity when the November data hit. Sure enough, earlier today the Fed reported the total amount of earmarked gold (or gold “held in foreign and international accounts and valued at $42.22 per fine troy ounce; not included in the gold stock of the United States“) for the month of November: at $8.184 billion, this was a $60 million drop from the previous month (or it would be at the $42.22/ounce “price”; at market prices the value of the withdrawn gold is about $1.7 billion).
In actual tonnage terms, this means that in November some 47.1 tons of gold were withdrawn from the NY Fed, bringing the Fed’s total earmarked gold to just 6,029 tonnes: the biggest single monthly outflow going back to the turn of the century. This is also the lowest amount of gold held at the NY Fed vault located at 33 Liberty street (and just across from the even bigger vault located at 1 Chase Manhattan Plaza) in the 21st century. Continue reading »
Why will Christmas 2014 be the last Christmas in America? It’s simple: declining wages cannot support an ever-expanding mountain of debt. The Federal Reserve has played a game for six long years of lowering the cost of debt (i.e. the rate of interest borrowers must pay), which has enabled stagnating wages to support ever heavier debt loads. There is an endgame in sight to this financial trickery…