Tag Archive: central-banks

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 »

Fed Credit and the US Money Supply – The Liquidity Drain Accelerates

2018-10-11

by

2018-10-11

Fed credit in 2017 (blue bars) vs. 2018 (red bars)
Federal Reserve Credit Contracts Further. We last wrote in July about the beginning contraction in outstanding Fed credit, repatriation inflows, reverse repos, and commercial and industrial lending growth, and how the interplay between these drivers has affected the growth rate of the true broad US money supply TMS-2 (the details can be seen here: “The Liquidity Drain Becomes Serious” and “A Scramble for Capital”).

Read More »

As Emerging Market Currencies Collapse, Gold is being Mobilized

2018-09-03

by

2018-09-03

EM-cartoon
In recent weeks, global financial markets have been increasingly spooked by an intensifying crisis in emerging market currencies including those of Turkey and Argentina. Add to this the ongoing currency crisis in Venezuela and the currency problems of Iran.

Read More »

A Scramble for Capital

2018-07-26

by

2018-07-26

TMS-2 vs. C&I loans
A Spike in Bank Lending to Corporations – Sign of a Dying Boom? As we have mentioned on several occasions in these pages, when a boom nears its end, one often sees a sudden scramble for capital. This happens when investors and companies that have invested in large-scale long-term projects in the higher stages of the production structure suddenly realize that capital may not be as plentiful as they have previously assumed.

Read More »

US Money Supply and Fed Credit – the Liquidity Drain Becomes Serious

2018-07-18

by

2018-07-18

Our good friend Michael Pollaro, who keeps a close eye on global “Austrian” money supply measures and their components, has recently provided us with a very interesting update concerning two particular drivers of money supply growth. But first, here is a chart of our latest update of the y/y growth rate of the US broad true money supply aggregate TMS-2 until the end of June 2018 with a 12-month moving average.

Read More »

Central Bank Investment Strategies

2018-07-10

by

2018-07-10

A survey of central banks and sovereign wealth funds by Invesco sheds light on their investment plans. The traditional separation of markets and the state may be helpful for ideological arguments, but the real situation is more complicated.  Central banks and their investment vehicles (sovereign wealth funds) are market participants.  In some activities, such as custodian, central banks compete with the private sector.

Read More »

Merger Mania and the Kings of Debt

2018-06-24

by

2018-06-24

Corporate Debt
Another Early Warning Siren Goes Off. Our friend Jonathan Tepper of research house Variant Perception (check out their blog to see some of their excellent work) recently pointed out to us that the volume of mergers and acquisitions has increased rather noticeably lately. Some color on this was provided in an article published by Reuters in late May, “Global M&A hits record $2 trillion in the year to date”, which inter alia contained the following...

Read More »