Tag Archive: central-banks

Quantitative Easing: A Boon or Curse?

2021-07-24

by

2021-07-24

Central banks’ massive Quantitative Easing (QE) programs have come under scrutiny many times since the central banks fired up the printing press and began quantitative easing programs en masse after the 2008-09 Great Financial Crisis. However, the increase in central bank assets due to quantitative easing programs during the crisis pale in comparison to the QE programs during the Covid pandemic. As economies recovered after the...

Read More »

FX Daily, January 21: It is the ECB’s Turn but Little New to be Said or Done

2021-01-21

by

2021-01-21

Overview:  The S&P 500 and NASDAQ gapped higher yesterday to record-levels, and the reflation theme lifted Asia Pacific shares for the third session today.  South Korea, Taiwan, and China led the advance. 

Read More »

October Monthly

2020-10-03

by

2020-10-03

After falling in July and August, the US dollar strengthened against most of the major currencies in September.  The dramatic pullback in equities seemed to have undergirded the yen's resilience, which gained a net 0.25% against the dollar.

Read More »

Game Over Spending

2020-07-13

by

2020-07-13

Coming and Going Like a Wildfire. Second quarter 2020 came and went like a California wildfire.  The economic devastation caused by the government lock-downs was swift, the destruction immense, and the damage lasting.  But, nonetheless, in Q2, the major U.S. stock market indices rallied at a record pace.

Read More »

US Money Supply – The Pandemic Moonshot

2020-06-16

by

2020-06-16

Printing Until the Cows Come Home… It started out with Jay Powell planting a happy little money tree in 2019 to keep the repo market from suffering a terminal seizure. This essentially led to a restoration of the status quo ante “QT” (the mythical beast known as “quantitative tightening” that was briefly glimpsed in 2018/19). Thus the roach motel theory of QE was confirmed: once a central bank resorts to QE, a return to “standard monetary policy”...

Read More »

FX Daily, March 2: Central Banks’ Words of Assurance have Short Life

2020-03-02

by

2020-03-02

Overview: Comments beginning with Powell before the weekend, and BOJ and BOE earlier today promising support have saw equity markets briefly stabilize after last week's dramatic moves. The G7 will hold a teleconference this week, but speculation of a coordinated rate move does not seem particularly likely. Most of the large stock markets in the Asia Pacific region rallied, led by a 3%+ advance in China.

Read More »

Banana Republic Money Debasement In America

2019-12-16

by

2019-12-16

Addicted to Spending. There are many falsehoods being perpetuated these days when it comes to money, financial markets, and the economy. But when you cut the chaff, three related facts remain: Uncle Sam needs your money. He needs a lot of your money. And he needs it bad!

Read More »

August TIC: Trying To Get Collateral Out of the Shadows

2019-10-23

by

2019-10-23

US TIC, 2013-2019
The second most frustrating aspect of trying to analyze global shadow money is how the term “shadow” really applies in this case. It’s not really because banks are being sneaky, desperately maintaining their cover for any number of illicit activities they are regularly accused of undertaking. The money stays in the shadows for the simple reason central bankers don’t know their jobs; even after a somehow Global Financial Crisis in 2008, they don’t...

Read More »

US Money Supply Growth – Bouncing From a 12-Year Low

2019-10-16

by

2019-10-16

US broad true money supply TMS-2, year-on-year growth w. 12-month moving average
True Money Supply Growth Rebounds in September. In August 2019 year-on-year growth of the broad true US money supply (TMS-2) fell to a fresh 12-year low of 1.87%. The 12-month moving average of the growth rate hit a new low for the move as well. The main driver of the slowdown in money supply growth over the past year was the Fed’s decision to decrease its holdings of MBS and treasuries purchased in previous “QE” operations.

Read More »

Fed Chair Powell’s Inescapable Contradiction

2019-10-14

by

2019-10-14

Conflict and contradiction. These were two of the main themes reverberating around the world of centralized monetary planning this week. On Tuesday, for instance, a novel and contradictory central banker parlance – “reserve management purposes” – was birthed into existence by Fed Chair Jay Powell. We will have more on this later on. But first, to best appreciate the contradiction, we must present the conflict.

Read More »

Repo Quake – A Primer

2019-10-03

by

2019-10-03

Chaos in Overnight Funding Markets. Most of our readers are probably aware that there were recently quite large spikes in repo rates. The events were inter alia chronicled at Zerohedge here and here. The issue is fairly complex, as there are many different drivers at play, but we will try to provide a brief explanation.

Read More »

September Monthly

2019-09-02

by

2019-09-02

Three forces are shaping the investment climate. The US-China trade conflict escalates at the start of September as both will raise tariffs on each other's goods and are threatening another round in mid-December (US 25% tariffs on $250 of Chinese imports will increase to 30% on October 1).

Read More »

New monetary policies for new challenges

2019-08-16

by

2019-08-16

Towards a New Monetary Policy Style, 1981-2029
As central banks try (yet again) to bolster faltering growth and inflation, it is important to grasp how the ‘style’ and aims of monetary policy-making have changed over time and how they need to evolve in the future.The world is being disrupted by structural trends such as populism, demographic and climate change and technological innovation.

Read More »

US Money Supply Growth and the Production Structure – Signs of an Aging Boom

2019-06-01

by

2019-06-01

National ISM new orders vs Value of factory orders
Money Supply Growth Continues to Decelerate. Here is a brief update of recent developments in US true money supply growth as well as the trend in the ratio of industrial production of capital goods versus consumer goods (we use the latter as a proxy for the effects of credit expansion on the economy’s production structure).

Read More »

THE PENALTY FOR SAVING

2019-05-30

by

2019-05-30

In previous articles, we have outlined in great detail the many faults of the current monetary policy direction of major central banks and the large-scale economic impact of keeping interest rates artificially low. Among the worst offenders is the ECB, that is unapologetically persistent on continuing this exercise in absurdity that are negative interest rates.

Read More »

You Know It’s Coming

2019-01-10

by

2019-01-10

Benchmark 10-year UST 2013-2016
After a horrible December and a rough start to the year, as if manna from Heaven the clouds parted and everything seemed good again. Not 2019 this was early February 2015. If there was a birth date for Janet Yellen’s “transitory” canard it surely came within this window. It didn’t matter that currencies had crashed and oil, too, or that central banks had been drawn into the fray in very unexpected ways.

Read More »

The Big Picture: Paper Money vs. Gold

2018-12-12

by

2018-12-12

PBoC balance sheet
Numbers from Bizarro-World. The past few months have been really challenging for anyone invested in gold or silver; for me personally as well. Despite serious warning signs in the economy, staggering debt levels and a multitude of significant geopolitical threats at play, the rally in risk assets seemed to continue unabated.

Read More »

A Global Dearth of Liquidity

2018-12-08

by

2018-12-08

Eurozone - Citi Economic Surprise Index, Jan 2016 - Nov 2018
Worldwide Liquidity Drought – Money Supply Growth Slows Everywhere This is a brief update on money supply growth trends in the most important currency areas outside the US (namely the euro area, Japan and China)  as announced in in our recent update on US money supply growth (see “Federal Punch Bowl Removal Agency” for the details).   Nobody likes a drought. This collage illustrates why.   The liquidity drought is not confined to the US – it...

Read More »

Does the recent spate of Central Bank gold buying impact demand and price?

2018-11-05

by

2018-11-05

There has been a lot of media coverage recently about the re-emergence of central bank gold buying and the overall larger quantity of gold than central banks as a group have been buying recently compared to previous years. For example, according to the World Gold Council’s Gold Demand Trends for Q3 2018, net purchases of gold by central banks in the third quarter of this year were 22% higher than Q3 2017, and the highest quarterly level since Q4 of...

Read More »

The Gold Standard: Protector of Individual Liberty and Economic Prosperity

2018-10-13

by

2018-10-13

A Piece of Paper Alone Cannot Secure Liberty. The idea of a constitution and/or written legislation to secure individual rights so beloved by conservatives and among many libertarians has proven to be a myth. The US Constitution and all those that have been written and ratified in its wake throughout the world have done little to protect individual liberties or keep a check on State largesse.

Read More »