Financial expert Catherine Austin Fitts has long said before there is another big financial crash, there will be a big war. Fitts explains, “If you look at how fragile the geopolitics are, the danger, as I have always said, is that we go to violence, and then things really come unhinged. So, I’m worried about violence and war and kind of situation getting out of hand. That’s when you get the really dangerous scenarios.” Continue reading »
“We’re headed for a very severe monetary crisis and period of great instability — the very opposite of what has been experienced for the last six or seven years, when these markets have been effectively tranquilized by the central banks and their massive quantitative easing and intrusion into financial markets..
But it’s going to change because we’re reaching the point where they (central banks) are out of dry powder. I don’t think the central banks have infinite power. I don’t think they can keep interest rates suppressed forever if confidence is lost.
Remember, there are trillions of dollars of bonds out there. There is something like $225 trillion of total debt in the world (public and private), and $90 trillion of that is traded in one form or another. Continue reading »
AP reports today:
Federal Reserve Chair Janet Yellen is stressing the need to review the unconventional monetary policies that central banks around the world deployed in response to the 2008 global financial crisis.
She said Thursday that the post-crisis period offers policymakers an opportunity to assess the effectiveness of the tools and better understand the impact of new regulation. Continue reading »
Summing it all up…
Goldman Sachs -> Treasury -> PIMCO -> The Fed
Having recently failed in his bid to be democratically-elected to California’s governorship, it appears former Treasury Bailout chief and PIMCO ‘equity’ portoflio manager, Neel Kashkari has been selected (not elected) as Minneapolis Fed’s next president, replacing the uber-dovish Kocherlakota starting January 1st.
The Federal Reserve Bank of Minneapolis has named former banker, government official and unsuccessful California gubernatorial candidate Neel Kashkari to become its new president and chief executive officer. Continue reading »
What Janet knows, as The Burning Platform’s Jim Quinn exclaims, is that a 1% increase in interest rates would increase the interest on the National Debt from $400 billion per year to $600 billion per year, a 50% increase.
Interest rates back at NORMAL historical rates that we had as recently as 2007 would increase the interest on the National Debt to $1 trillion per year, a 150% increase.
Plus, the National Debt increases by $1.5 billion per day, so our interest bill goes up by $35 million per day already.
Do you really think Yellen is going to be increasing interest rates?
While we are used to David Stockman’s detailed and lengthy “nailing” of the real state of the world, the following brief clip of an interview with Fox Business, in which David explains how to ‘fix’ so many of our problems, can be summarized perfectly in just seven short words: “Replace The Fed with the free market.”…
As the market now diligently calculates the suddenly surging odds of a December rate hike, here’s Yellen with a preview of what will happen once the rate hike cycle is aborted…
- YELLEN SAYS IF OUTLOOK WORSENED FED MIGHT WEIGH NEGATIVE RATES
… just as it was aborted in Japan in August of 2000 when the BOJ also decided to send a signal how much stronger the economy is by hiking 25 bps, only to cut 7 months later and to proceed to monetize not only all net Japanese debt issuance a decade later, but to hold half of all equity ETFs.
The good news: Continue reading »
“When a country embarks on deficit financing (Bush-Obamanomics) and inflationism (Quantitative easing) you wipe out the middle class and wealth is transferred from the middle class and the poor to the rich.
– Ron Paul
“Deficits mean future tax increases, pure and simple. Deficit spending should be viewed as a tax on future generations, and politicians who create deficits should be exposed as tax hikers.”
– Ron Paul
Wall Street is counting its winnings from seven years of easy money.
The results represent a clear victory for Wall Street over Main Street, according to the team of Michael Hartnett, BofA’s chief investment strategist.
“Zero rates and asset purchases of central banks have, thus far, proved much more favorable to Wall Street, capitalists, shadow banks, ‘unicorns,’ and so on than it has for Main Street, workers, savers, banks and the jobs market,” the BofA team wrote.
– From the Bloomberg article: Here’s How Much QE Helped Wall Street Steamroll Main Street
In a refreshing bit of honesty from “Too Big to Fail and Jail” Wall Street firm Bank of America, the American peasants are informed about a reality with which they are all too familiar. That the U.S. government and the Federal Reserve Bank bailed out the rich and powerful, while leaving average citizens high and dry. Continue reading »
… here are some shocking statistics on how we got there, and which we all take for granted, courtesy of BofA:
- There have been 606 global rate cuts since LEH
- $12.4 trillion of central bank asset purchases (QE) since Bear Stearns
- The Fed is operating a zero rate policy for the longest period ever (even exceeding the WW2 Aug’37-Sep’42 zero rate period)
- European central banks operating negative rate policies (Swiss policy rate currently -0.75%; Sweden’s policy rate currently -0.35
- Just this month, the PBoC cut rates, the ECB confirmed QE2, Sweden announced additional QE, and the BoJ promised additional easing if necessary “without hesitation”
- $6.3 trillion global government bonds currently yielding <0%
- $20.0 trillion global government bonds currently yielding <1%
But wait, there’s more in describing what BofA says is the most immense and long-lasting monetary stimulus, i.e., bubble, in history:
In September, the total physical gold held in custody at the NY Fed dropped another 19.9 tons in September, down to 5,919.5 tons. This was a doubling in gold withdrawals from 10 tons in August, and is the highest withdrawal since January. At just under 5,920 total tons in NY Fed inventory, this is the lowest amount of gold held in NY Fed custody in decades.
Back in 1999, a quarter of all 25-year-olds lived with their parents. By 2013 this number has doubled, and currently half of young adults live in their parents home.
While the troubling implications for the economy from this startling increase are self-evident, and have been extensively discussed both here and elsewhere (and are among the key factors pushing both the US and global economy into secular stagnation), a just as important question is why are increasingly more young adults still living at home. Continue reading »
If you’re a journalist, it’s always exciting to get the chance to interview courageous people – you know, war heroes, revolutionaries, innovators, political dissidents and the like.
Of course when it comes to courage, there’s scarcely a man alive that compares to Ben Bernanke. Indeed, he even had the courage to use the word “courage” in the title of a book about monetary policy knowing very well that doing so would likely lead to all manner of contemptuous ridicule.
FT’s Martin Wolf recently got the opportunity to chat with courageous Ben over “firm, juicy” swordfish and grilled halibut at McCormick & Schmick’s in Chicago. Predictably, the interview is replete with cringe worthy soundbites, some of which we present below. Continue reading »
The Fed has managed to kill two birds with one stone: it no longer provides a simple, one-stop-shop way to reconcile the total US credit stock, and it quietly boosted total US consolidated credit by $2.7 trillion to $62.1 trillion as of June 30, 2015.
Are you ready for this… are you sitting down… you better be sitting down. Here it comes
- BERNANKE SAYS BIGGEST IMPACT OF QE WAS TO ‘CREATE JOBS’
From “hope” to “nope”…
“Peak Self-Delusion” or just another Big Lie?
Financial writer and analyst Bix Weir is not surprised by the Federal Reserve’s policies because it is all part of the long term plan. Weir explains, “The goal, since we went off the gold standard in 1971, has been to run the financial system as long and as hard as possible, sucking up all the benefits of fiat money, and there are very few attempts to slow this mess down. The idea is to put as much money as you can . . . until you have printed so much money the system implodes. This was a Nobel Prize winning paper in the 1960’s called “On the Road to the Golden Age.” It basically says if you have this freedom and flexibility with the monetary system, run it as hard as you can until people stop accepting the unbacked fiat money, then crash the system and go back to something safe and sound after it all blows up. . . . What they need is a big enough bubble so when it crashes, it take out all the derivatives, the malfeasance of the banks, the good guys and the bad guys and all the things going on behind the scenes. They need the bubble so big, and that’s what they are doing right now is blowing the bubble so big everybody feels the effect of a crash.”
When is the next crash coming? Weir says it will all unwind before “the end of this year.” Weir contends, “The decision will need to be made this year. The banks will, once again, come to Congress and say we need money for a bailout. That decision will be made by the U.S. people, not by Congress, not by the Fed and not by the banks. It’s going to come to the people, and I believe they will say no to bailouts.” Continue reading »
While the world was focused on the content of Yellen’s Thursday speech in Amherst for clues on whether the Fed Chair would back off her disturbingly dovish outlook on the world, what was the real surprise was the delivery: as we showed previously, there was a very troubling 100 second interval at the very end of the 50 minute, 5,000+ word speech, in which the 69-year old Yellen suddenly seemed unable to read the words on the page, was rereading the same phrase over and over, paused for long stretches at a time, and then had a violent reaction that forced her to end her speech prematurely. Watch it again below.
“Yellen faltered at end of her speech. Last page was agonizing. I don’t think she felt well but she seemed better when she left the stage.”
“…the federal funds rate and other nominal interest rates cannot go much below zero, since holding cash is always an alternative to investing in securities. … the lowest the FOMC can feasibly push the real federal funds rate is essentially the negative value of the inflation rate. As a result, the Federal Reserve has less room to ease monetary policy when inflation is very low. This limitation is a potentially serious problem because severe downturns such as the Great Recession may require pushing real interest rates far below zero for an extended period to restore full employment at a satisfactory pace.“
Moving on, but it only gets better because suddenly, out of the blue, a new Treasury bond market analyst emerges: none other than disgraced former CIA head David Petraeus, who somehow avoided treason charges when it was revealed that he had a mistress to whom he had leaked confidential material resulting in his prompt termination from the CIA, only to reemerge several years later…. as a Treasury market expert (as well as being recently hired by KKR, of course, just so the private equity company can scrub all of his formerly confidential knowledge before giving him the boot in the nearest future).
CNN introduces him as follows: “Petraeus is one of America’s brightest minds on matters of national security. He served as a top military commander in charge of troops in Iraq and Afghanistan before becoming director of the CIA in 2011.”
Leaving aside the laughable assertion of the first statement, after reading some of his comments we can only imagine he, as a member of the “intelligence community”, is a devoted subscriber of the abovementioned “Strategic Intelligence” newsletter.
Because here is the one statement from Petraeus that we read, read again, then kept rereading for one simple reason…
“There is no shortage of customers for the purchase of U.S. Treasuries,” said Petraeus…. “Given the relative strength of the U.S. economy and the prospect of the Fed raising interest rates at some point in the months ahead, I suspect there will continue to be very keen interest in U.S. Treasuries,” Petraeus said.
… everything in it is dead wrong. Continue reading »
“And just like that Weimar 2.0 is born.“
Last Friday, we posted what we thought was a watershed report by Australia’s largest investment bank Macquarie, one which openly called for central bank funding of fiscal spending, aka “helicopter money”, by directly monetizing treasuries. Ironically, the bank made the call despite admitting that it would not work in the long run, leading to even more stagflation and deflation. This was the gist:
As velocity of money globally continues to fall, conventional QEs have to become exponentially larger, as marginal benefit declines. If public sector is not prepared to step aside, what other measures can be introduced to support nominal GDP and avoid deflation? Continue reading »
In the chart below I’ve indexed real median personal income against real corporate profits (before tax w/o adjustments) to the beginning of 2009, the point at which central bankers implemented trickle down economics to rescue Americans from the largest gov/banking policy induced disaster in the history of the world. Let’s have a look at the results of the bankers trickle down strategy….
Go figure eh…. Anyone think moar QE is the answer?? We just won’t know unless we keep on trying I suppose… says Ms. Yellen and the Business Roundtable (click to see many of the very faces of those that reached their shifty little hands into the ass of the golden goose and pulled out trillions of printed dollars but left trillions in debt obligations for your grandchildren). Continue reading »
“As interest rates go more negative, market participants will have increasing incentives to make payments quickly and to receive payments in forms that can be collected slowly. This is exactly the opposite of what happened when short-term interest rates skyrocketed in the late 1970s: people then wanted to delay making payments as long as possible and to collect payments as quickly as possible…. if interest rates go negative, we may see an epochal outburst of socially unproductive—even if individually beneficial—financial innovation.”
The Federal Reserve yielded to international pressure making the very same mistake that it made during 1927.
Back then, there was a secret meeting and the Fed agreed to lower US rates to try to help Europe and thereby deflect capital inflows back to Europe.
The exact opposite unfolded in the aftermath and even more money abandoned Europe and flowed directly into the US share market.