The man who trades freedom for security does not deserve nor will he ever receive either. – Benjamin Franklin
– It Really Is As Simple As That (ZeroHedge, Sep 8, 2015):
Six years after we first explained the only thing that matters for this “market”, JPMorgan finally figured it out, and in doing so proudly joined the ranks of the “tinfoil hat, conspiracy theorists” unable to grasp the finer nuances of the Magic Money Tree theory.
Now, who else can’t wait for the Fed’s first rate hike in nearly a decade?
“Evidence in support of Bernanke’s view of the channels through which QE works is at best mixed. There is no work, to my knowledge, that establishes a link from QE to the ultimate goals of the Fed inflation and real economic activity. Indeed, casual evidence suggests that QE has been ineffective in increasing inflation.”
– After 6 Years Of QE, And A $4.5 Trillion Balance Sheet, St. Louis Fed Admits QE Was A Mistake (ZeroHedge, Aug 19, 2015):
As you’re no doubt aware, the Fed is fond of using the research departments at its various branches to validate policy and analyze away bad economic outcomes. For instance, earlier this year, the San Francisco Fed came up with an academic justification for the now infamous double seasonally adjusted GDP print – they call it “residual seasonality.” Then there’s the NY Fed, where researchers recently took to the bank’s blog to explain why, despite all evidence to the contrary, Treasury liquidity is “fairly favorable.”
– Goldman “Conspiracy Theory” Validated As ECB Expands QE Program (ZeroHedge, July 2, 2015):
The ECB has expanded the list of SSA securities eligible for purchase under PSPP. The updated list includes:
Read moreGoldman “Conspiracy Theory” Validated As ECB Expands QE Program
– ECB Says “Grexit Can No Longer Be Excluded”, Hints At More QE (ZeroHedge, June 29, 2015):
It seems Goldman Sachs’ conspiracy theory was right all along…
ECB’S COEURE SAYS ECB IS EVEN READY TO USE NEW INSTRUMENTS, WITHIN ITS MANDATE
GREECE COULD EXIT EURO, COEURE SAYS IN LES ECHOS INTERVIEWThis is exactly what The ECB wanted all along (and their leaders overlords) – all they needed was an ‘excuse’. Or, in the parlance of Rahm Emanuel’s times, “Let no Greek default crisis go to QE waste.”
– This Insane Debt Chart Explains Why Chinese QE Is Inevitable (ZeroHedge, June 29, 2015):
Last week we took an in-depth look at how China’s bewildering hodge-podge of hastily construed easing measures can’t seem to get out of their own way. Perhaps the most poignant example of this is how the country’s massive local government debt swap effort — which, as a reminder, aims to restructure a provincial government debt load that amounts to 35% of GDP — is effectively making it more difficult for the PBoC to keep a lid on rates, even as the central bank has embarked on a series of policy rate cuts, with the latest effort coming over the weekend. Here’s how we described the situation last week:
Read moreThis Insane Debt Chart Explains Why Chinese QE Is Inevitable
– Financial System “Will Implode” … “Hold Precious Metals” – Faber (GoldCore, June 15, 2015):
– “Whole Financial System Will One Day Implode” – Marc Faber
– “I feel like I’m on the Titanic …”
– Arguing over the best assets akin to re-arranging deck chairs on Titanic
– Investors need escape plan and “safety boat”
– Forget Fed rate hike, Fed QE 4 is coming
– Diversify and hold “commodities, precious metals”…
– The War On Cash: Officially Sanctioned Theft (Of Two Minds, June 13, 2015):
While the benefits to banks and governments of banning physical cash are self-evident, there are downsides to the real economy and to household resilience.
You’ve probably read that there is a war on cash being waged on various fronts around the world. What exactly does a war on cash mean?It means governments are limiting the use of cash and a variety of official-mouthpiece economists are calling for the outright abolition of cash. Authorities are both restricting the amount of cash that can be withdrawn from banks, and limiting what can be purchased with cash.These limits are broadly called capital controls.The War On Cash: Why Now?
“When a country embarks on deficit financing 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
Quantitative easing = printing money = creating money out of thin air = increasing the money supply = inflation = hidden tax on monetary assets = theft!!!
“By a continuing process of inflation, governments can confiscate, secretly and unobserved, an important part of the wealth of their citizens. There is no subtler, no surer means of overturning the existing basis of society than to debauch the currency. The process engages all the hidden forces of economic law on the side of destruction, and does it in a manner which not one man in a million is able to diagnose.”
– John Maynard Keynes“In the absence of the gold standard, there is no way to protect savings from confiscation through inflation. … This is the shabby secret of the welfare statists’ tirades against gold. Deficit spending is simply a scheme for the confiscation of wealth. Gold stands in the way of this insidious process. It stands as a protector of property rights. If one grasps this, one has no difficulty in understanding the statists’ antagonism toward the gold standard.”
– Alan Greenspan
– Oops! Philly Fed Admits QE widens inequality (Not Quant, June 10, 2015):
Once again, the Federal Reserve proves that it’s the last one to know everything that we knew already. Today’s stunning announcement: The Philadelphia Fed admits they (“may have”) made the wealthy wealthier and Main Street poorer.
Oops. Sorry America.
The Philly Fed insists that “redistributing wealth” to the wealthy isn’t the main idea, but just a potential side effect of stimulus that they can’t do much about.
Read moreOops! The Federal Reserve Admits QE Widens Inequality
Asked whether he would repeat an assurance he gave in late 2012 that Greece wouldn’t default, Wolfgang Schäuble told The Wall Street Journal and French daily Les Echos that “I would have to think very hard before repeating this in the current situation.” To which Moody’s had just one thing to add: “there is a high likelihood of an imposition of capital controls and a deposit freeze.”
– The Gloves Come Off: Moody’s Warns Of Greek “Deposit Freeze” As Schauble “Won’t Rule Out Default” (ZeroHedge, May 20, 2015):
Ever since Syriza took over the Greek government and has refused, at least until now, to concede to every Troika demand of perpetuating a status quo which it was elected with a mandate to overturn, Europe has done everything in its power to make not only Syriza’s life increasingly difficult and hostile, but has taken every opportunity to turn the Greek population against its rulers, in hopes that a more “moderate”, technocrat government would replace the “radical leftists.” So far it has failed, despite the best attempts by the ECB and the European Commission to sput a terminal bank run.
“By a continuing process of inflation, governments can confiscate, secretly and unobserved, an important part of the wealth of their citizens. There is no subtler, no surer means of overturning the existing basis of society than to debauch the currency. The process engages all the hidden forces of economic law on the side of destruction, and does it in a manner which not one man in a million is able to diagnose.”
– John Maynard Keynes
From the article:
“If that’s “success“, we would hate to see what Keynesian failure looks like.”
– This Is What Keynesian “Success” Looks Like: Soaring Part-Time Jobs, Record Low Real Wages (ZeroHedge, May 17, 2015):
Though we noted the plight of the Japanese worker in a previous post, a plight which arrived in the US some five years ago yet which the mainstream still refuses to acknowledge, the punchline may have been somewhat diluted. So here it is again, without much additional commentary.
When it comes to the consequences of Japan’s QE, now in its third year, the head of the BOJ has been very clear:
Read moreThis Is What Keynesian “Success” Looks Like: Soaring Part-Time Jobs, Record Low Real Wages
– Worst Ever US Trade Deficit Excluding Crude Hints At Upcoming QE4 (ZeroHedge, May 5, 2015):
Remember that in a beggar thy neighbor world, where currency warfare has once again broken out between the US, Europe and Japan, for every winner there is a loser. In this case, the loser is the one country that has decided that a strong currency is a great thing for its economy (if only for the time being): that would be the US. Why is this relevant? Because as the chart below shows, US trade excluding Petroleum, just crashed to $43.7 billion, the worst print in the history of the series, suggesting that portrayals of the US as a resurgent export powerhouse are completely erroneous, and that instead the US is as big a net importer of goods and services (and soon to be oil) as ever.
…
– Guess Who Predicted The Failure Of QE (ZeroHedge, April 30, 2015):
Janet Yellen:
“As Japan found during its quantitative easing program, increasing the size of the monetary base above levels needed to provide ample liquidity to the banking system had no discernible economic effects aside from those associated with communicating the Bank of Japan’s commitment to the zero interest rate policy.
I think my views on this mirror those that you expressed in your opening comments, Mr. Chairman.”
How did that work out?
Read moreAnd Guess Who Predicted The Failure Of QE: Yellen … AND Bernanke!
– FOMC Is Bluffing; Prepare for QE4 and No Rate Hike (Video) (SchiffGold, April 28, 2015):
The Federal Reserve has a two-day meeting this week. CNBC World asked Peter Schiff what he expects the results of the meeting will be. Peter argued that the Fed will continue to bluff about raising interest rates. He believes a fourth round of quantitative easing is more likely in the next year.
Follow along with this transcript: Peter: The bigger problem for the US market is the softening US data that came out today. And now the weakening US dollar, which I think is about to get a lot weaker as people get their arms around the real predicament that the US economy is in.
Read morePeter Schiff on CNBC: FOMC Is Bluffing; Prepare For QE4 And No Rate Hike (Video)
– China Considers Launching QE; Shanghai Stocks Soar (ZeroHedge, April 27, 2015):
Nearly two months ago we explained “How Beijing Is Responding To A Soaring Dollar, And Why QE In China Is Now Inevitable” in which we cited Cornerstone who reminded us “that from 2007 to late 2008, U.S. fed funds dropped 500 bp, and then the Fed still needed to do QE? The backdrop for China looks a bit similar. We had a credit bubble, they have a credit bubble. We had a housing bubble, they have a housing/investment bubble. Will China eventually have to go down the same path as the U.S., and the Eurozone? … The PBoC will first cut rates to 0%, before contemplating QE.”
To this we added that “once China, that final quasi-Western nation, proceeds to engage in outright monetization of its debt, then and only then will the terminal phase of the global currency wars start: a phase which will, because global economic growth and that all important lifeblood of a globalized economy – trade – at that point will be zero if not negatve, will see an unprecedented crescendo of money printing by absolutely everyone, before coordinated devaluations mutate into uncoordinated, and when central bank actions morph from “all for one” to “each man for himself.“
– Boston Fed Admits There Is No Exit, Suggests QE Become “Normal Monetary Policy” (ZeroHedge, April 26, 2015):
Perhaps it was inevitable. After all, the term “QEfinity” entered the financial lexicon long ago and there were already quite a few commentators out there suggesting that it may now be too late to remove the punchbowl, meaning an “exit” will not only prove difficult, but may well be impossible.
Take Makoto Utsumi, who oversaw foreign-exchange policy at the Japanese Ministry of Finance from 1989-1991, for example. Utsumi recently said a BoJ QE exit was out of the question “for the foreseeable future” and went on to note that “even the thought of an exit is a nightmare.” Meanwhile, it’s virtually impossible to say what effect Fed tightening will have in both the Treasury and corporate bond markets given the lack of liquidity in both and then there’s EM where carnage unfolded in 2013 after a certain bearded bureaucrat said the wrong thing about the direction of Fed policy.
Given all of this, we’re not surprised to learn that in a new paper entitled “Let’s Talk About It: What Policy Tools Should The Fed ‘Normally’ Use?”, the Boston Fed is now suggesting that QE become a permanent tool at the disposal of the Fed. After all, “financial stability” depends on it…
Read moreBoston Fed Admits There Is No Exit, Suggests QE Become ‘Normal Monetary Policy’
“Will fail”???
– Multibillion Hedge Fund Manager: “Ultimately QE Will Fail; US And China Might Enter Recession At The Same Time” (ZeroHedge, April 20, 2015):
“Ultimately, the current QE programs will fail. I think most likely through a large devaluation in the emerging market currencies. Having dodged and parried so many blows from Central Bank QE programs, the market is seemingly failing to break higher. Breadth is narrowing in the US stock market, and credit spreads widening. Economic data, with the exception of jobs, which is a lagging indicator, indicate the US economy is peaking. To me it looks like the US and China might go into recession at the same time.”
…
– None Dare Call It Fraud—–Its Just A “Savings Glut” (David Stockman’s Contra Corner, April 10, 2015):
They were jawing again this morning about the low “natural rate” of interest on bubble vision, implying that the workers of the world have succumbed to an atavistic fit of wild-eyed thrift. Gosh, the world is so inundated in a savings glut, averred Wall Street economist Ed McKeon, that the interest rate would be near zero—–even without the concerted action of the central banks.
Hogwash! Since the turn of the century the major central banks have purchased upwards of $15 trillion worth of government bonds and other fixed income assets. Yes, these reckless money printers have suspended common sense, but they have not repealed the law of supply and demand, nor even suspended its relentless operation for a nanosecond.
So in adding massively to “demand” for something that sells at a price (the interest rate), the big fat bid of the central banks has caused fixed income markets to clear at much higher prices (lower yields) than would otherwise be the case. That’s just economics 101.
By contrast, were the market dependent solely upon the savings of America’s hand-to-mouth middle class, Europe’s legions of socialist pensioners, Japan’s mushrooming retirement colony or the millions of former peasant girls who labor for comparatively meager in Foxcon’s sweatshops, one thing would be certain: There would not be trillions of government bonds trading at negative nominal interest rates this very moment, or tens of trillions trading close to the zero bound and therefore at negative rates after inflation and taxes.
In a word, there is a $100 trillion bond market out there that has been priced by a handful of central bankers, not a planet teeming with exhuberant savers. The mad descent of the former into the whacky world of QE and ZIRP has caused a double whammy distortion in the bond markets of the world.
– Kyle Bass Warns “The Fed Is Backed Into A Corner… Equities Are My Biggest Liquidity Worry” (ZeroHedge, March 28, 2015):
While Kyle Bass is usually the smartest man in the room, among this crowd he is Einstein as he carefuly explains – while sitting politely during status quo interruptions – the real state of the world “the unintended consequence of QE has been to widen the income gap,” what is behind the Potemkin Village of the stock markets, how The Fed is “backed into a corner” of raising rates against their will, and why bond yields (at the long-end) will drop further. Currency wars are net positive, as Greg Ip suggests, and will not end well, as he concludes in one section, “why haven’t all the Yen left Japan already?”
“How many rich people do you know today that are poorer than they were at the peak in 06/07 (apart from Dick Fuld), I don’t think I know any.. QE has been distributive to the rich… but now that the world has started this policy it is unable to end it…
the next recession will be a hard one because the tools in the toolbox are not there to avert a severe downturn…”
– Finally The “Very Serious People” Get It: QE Will “Permanently Impair Living Standards For Generations To Come” (ZeroHedge, March 28, 2015):
When “very serious people” (even if it is those who once ran now defunct Bear Steanrs) announce it, with a 6 year delay, they make the Financial Times.
On the other hand, when Zero Hedge said precisely this 6 years ago, it was cast as a tin-foil clad group of conspriators who see the worst in every situation.
What is “it”? This:
The long-term consequences of global QE are likely to permanently impair living standards for generations to come while creating a false illusion of reviving prosperity.
In this case, it was said this week by Guggenheim’s Chairman of Investments and Global Chief Investment Officer, Scott Minerd. We are happy that increasingly more “serious people” come to the same conclusion which we posited first a 6 years ago.
– China’s Latest Spinning Plate: 10 Trillion In Local Government Debt (ZeroHedge, March 11, 2015)
China is in the midst of attempting to help local governments refinance a mountain of debt, some of which was accumulated off balance sheet via shadow banking conduits at relatively high rates. According to UBS, “Chinese domestic media are saying that the authorities are considering a Chinese “QE” with the central bank funding the purchase of RMB 10 trillion in local government debt.”
…
I would highly recommend you NOT to visit Japan (for at least the next 250,000 years).
Japan is doomed … on all levels.
– Japan projects to spend 43% of tax revenue just to pay interest on the debt (Sovereign Man, March 5, 2015):
It’s entirely possible that we may see interstellar space travel in our lifetime. And what a dream that would be.
But in the meantime, for anyone that’s losing patience with space technology, I would recommend you visit Japan. Because for anybody that has been here, this place is as close as it gets to being on another planet.
Japan is a land of irony and dichotomy. It is one of the most conservative cultures in the world, while simultaneously being one of the most perverted.
Read moreJapan Now Spends 43% Of Tax Revenue To Pay Interest On Debt
– EURUSD Hits 1.09 Handle, Lowest Since Sept 2003 (ZeroHedge, March 5, 2015):
Draghi’s devalued the Euro over 20% in 6 months…How much further?
More to come?
– Mutiny At The BoJ: Board Member Warns Of “Dire Consequences” (ZeroHedge, March 5, 2015):
The BoJ’s Takahide Kiuchi warns of “dire consequences” if the central bank continues to blatantly disregard the “side effects” of QE and also expresses skepticism about the ability of further asset purchases to boost inflation, going so far as to suggest that the BoJ’s prediction of 2% inflation by mid-2016 is nothing more than a fairytale.
…
– David Stockman Warns “It’s One Of The Scariest Moments In History” (ZeroHedge, March 1, 2015):
“The Fed is out of control,” exclaims David Stockman – perhaps best known for architecting Reagan’s economic turnaround known as ‘Morning in America’ – adding that “people don’t want to hear the reality and the truth that we’re facing.” The following discussion, with Harry Dent, outlines their perspectives on the looming collapse of free market prosperity and the desctruction of American wealth as policymakers “take our economy in a direction that is dangerous, that is not sustainable, and is likely to fully undermine everything that’s been built up and created by the American people over decades and decades.” The Fed, Stockman concludes, “is a rogue institution,” and their actions have led us to “one of the scariest moments in our history… it’s a festering time-bomb and we’re not sure when it will explode.”
– Janet Yellen Is Freaking Out About ‘Audit The Fed’ – Here Are 100 Reasons Why She Should Be (End Of The American Dream, Feb 24, 2015):
Janet Yellen is very alarmed that some members of Congress want to conduct a comprehensive audit of the Federal Reserve for the first time since it was created. If the Fed is doing everything correctly, why should Yellen be alarmed? What does she have to hide?
During testimony before Congress on Tuesday, she made “central bank independence” sound like it was the holy grail. Even though every other government function is debated politically in this country, Yellen insists that what the Federal Reserve does is “too important” to be influenced by the American people. Does any other government agency ever dare to make that claim?
But of course the Federal Reserve is not a government agency. It is a private banking cartel that has far more power over our money and our economy than anyone else does. And later on in this article I am going to share with you dozens of reasons why Congress should shut it down.
Read moreJanet Yellen Is Freaking Out About ‘Audit The Fed’ – Here Are 100 Reasons Why She Should Be