Tag Archive: central-banks

The Three Headed Debt Monster That’s Going to Ravage the Economy

2017-06-11

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2017-06-11

Mass Infusions of New Credit. “The bank is something more than men, I tell you.  It’s the monster.  Men made it, but they can’t control it.” – John Steinbeck, The Grapes of Wrath. Something strange and somewhat senseless happened this week. On Tuesday, the price of gold jumped over $13 per ounce. This, in itself, is nothing too remarkable. However, at precisely the same time gold was jumping, the yield on the 10-Year Treasury note was slip sliding...

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Necessity is the Mother of Invention – Retirees Desperate Reach for Yield

2017-06-10

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2017-06-10

Ben Bernanke’s creativity inspired a generation of economists and central bankers. QE, ZIRP and NIRP established a new class of economics that is mathematically sound but practically disastrous. Billions of dollars were transferred from savers to investors to boost the economy, but the wizards of quant forgot that something has to give. In this case, it was the formation of a pension crisis that threatens the golden years of millions of retirees...

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How to Stick It to Your Banker, the Federal Reserve, and the Whole Doggone Fiat Money System

2017-05-18

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2017-05-18

Ben Bernanke
Somehow, former Federal Reserve Chairman Ben Bernanke found time from his busy hedge fund advisory duties last week to tell his ex-employer how to do its job.  Namely, he recommended to his former cohorts at the Fed how much they should reduce the Fed’s balance sheet by.  In other words, he told them how to go about cleaning up his mess.

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The Triumph of Hope over Experience

2017-05-12

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2017-05-12

Voodoo Central Planning
On Wednesday the socialist central planning agency that has bedeviled the market economy for more than a century held one of its regular meetings. Thereafter it informed us about its reading of the bird entrails via statement (one could call this a verbose form of groping in the dark).

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Central Banks’ Obsession with Price Stability Leads to Economic Instability

2017-05-05

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2017-05-05

Card house cartoon
For most economists the key factor that sets the foundation for healthy economic fundamentals is a stable price level as depicted by the consumer price index. According to this way of thinking, a stable price level doesn’t obscure the visibility of the relative changes in the prices of goods and services, and enables businesses to see clearly market signals that are conveyed by the relative changes in the prices of goods and services.

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The Fed Will Blink

2017-05-02

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2017-05-02

Dow Jones Industrial Average Index, Daily, Sep 2016 - May 2017
GUALFIN, ARGENTINA – The Dow rose 174 points on Thursday. And Treasury Secretary Steve Mnuchin said we’d have a new tax system by the end of the year. Animal spirits were restless. But which animals? Dumb oxes? Or wily foxes? Probably both.

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Sweden’s Gold Reserves: 10,000 gold bars (pet rocks) shrouded in Official Secrecy

2017-04-28

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2017-04-28

In February 2017 while preparing for a presentation in Gothenburg about central bank gold, I emailed Sweden’s central bank, the Riksbank, enquiring whether the Riksbank physically audits Sweden’s gold and whether it would provide me with a gold bar weight list of Sweden’s gold reserves (gold bar holdings). The Swedish official gold reserves are significant and amount to 125.7 tonnes, making the Swedish nation the world’s 28th largest official gold...

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Cracks in Ponzi-Finance Land

2017-04-27

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2017-04-27

Retail Junk Debt, April 2017
Retail Debt Debacles The retail sector has replaced the oil sector in a sense, and not in a good way. It is the sector that is most likely to see a large surge in bankruptcies this year. Junk bonds issued by retailers are performing dismally, and within the group the bonds of companies that were subject to leveraged buyouts by private equity firms seem to be doing the worst (a function of their outsized debt loads).

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Simple Math of Bank Horse-Puckey

2017-04-23

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2017-04-23

Sky from Mt. Wilson
We stepped out on our front stoop Wednesday morning and paused to take it all in. The sky was at its darkest hour just before dawn. The air was crisp. There was a soft coastal fog. The faint light of several stars that likely burned out millennia ago danced just above the glow of the street lights.

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Hell To Pay

2017-04-18

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2017-04-18

Yellen Cartoon
Economic nonsense comes a dime a dozen. For example, Federal Reserve Chair Janet Yellen “think(s) we have a healthy economy now.” She even told the University of Michigan’s Ford School of Public Policy so earlier this week. Does she know what she’s talking about?

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LIBOR Pains

2017-04-01

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2017-04-01

If one searches for news on LIBOR (=London Interbank Offered Rate, i.e., the rate at which banks lend dollars to each other in the euro-dollar market), they are currently dominated by Deutsche Bank getting slapped with a total fine of $775 million for the part it played in manipulating the benchmark rate in collusion with other banks (fine for one count of wire fraud: US$150 m.; additional shakedown by US Justice Department: US$625 m., the price...

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TIC Analysis of Selling

2017-03-25

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2017-03-25

When the Treasury Department released its Treasury International Capital (TIC) data for December, what was a somewhat obscure report suddenly found mainstream attention. Private foreign investors had sold tens of billions in US securities primarily US Treasury bonds and notes which the media then made into some kind of warning to then-incoming President Trump. It was supposed to be a big deal, the kind of rebuke reserved for disreputable leaders of...

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Their Gap Is Closed, Ours Still Needs To Be

2017-02-19

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2017-02-19

Potential Real GDP, 1999Q1 - 2009Q1
There are actually two parts to examining the orthodox treatment of the output gap. The first is the review, looking backward to trace how we got to this state. The second is looking forward trying to figure what it means to be here. One final rearward assessment is required so as to frame how we view what comes next. As I suggested earlier this week, the so-called output gap started at the trough of the Great “Recession” at around 10% of the CBO’s...

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Incrementum Advisory Board Meeting, Q1 2017 and Some Additional Reflections

2017-02-09

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2017-02-09

Yuan Onshore Weekly
The quarterly meeting of the Incrementum Advisory Board was held on January 11, approximately one month ago. A download link to a PDF document containing the full transcript including charts an be found at the end of this post. As always, a broad range of topics was discussed; although some time has passed since the meeting, all these issues remain relevant.

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The Central Banks Pull Back: Now It’s Up to Fiscal Policy to “Save the World”

2017-02-08

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2017-02-08

Top Spending from 1990 to 2012
Another problem is the rise of social discord, for reasons that extend beyond the reach of tax reductions and increased infrastructure spending. Have you noticed that the breathless anticipation of the next central bank "save" has diminished? Remember when the financial media was in a tizzy of excitement, speculating on what new central bank expansion would send the global markets higher in paroxysms of risk-on joy?

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A Biased 2017 Forecast, Part 1

2017-01-05

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2017-01-05

hind-sight
A couple weeks ago I was lucky enough to see a live one hour interview with Michael Lewis at the Annenberg Center about his new book The Undoing Project. Everyone attending the lecture received a complimentary copy of the book. Being a huge fan of Lewis after reading Liar’s Poker, Boomerang, The Big Short, Flash Boys, and Moneyball, I was interested to hear about his new project.

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Chinese Philosopher Kings, Losing their Yuan FX Religion?

2017-01-04

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2017-01-04

Two Stages of Chinese Monetary Policy - Inflationary Deflationary
It took a while, but the world are slowly coming to grips with the simple fact that the red-suzerains in Beijing are not the infallible leaders en route to a new superior economic model as they thought they were. All the craze that emanated from the spurious work of Joshua Cooper Ramo, which eventually led to works like “How China’s Authoritarian Model Will Dominate the Twenty-First Century,” are slowly catching up to reality.

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Why the Fed Destroyed the Market Economy

2017-01-01

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2017-01-01

Swing voters are a fickle bunch. One election they vote Democrat. The next they vote Republican. For they have no particular ideology or political philosophy to base their judgment upon.

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How to Invest in the New World Order

2016-12-26

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2016-12-26

In our latest Toward a New World Order, Part III we ended by promising to look closer at investment implications from the political and economic shift we currently find ourselves in; and that story must begin with the dollar.

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We Know How This Ends – Part 2

2016-12-23

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2016-12-23

History Most Definitely Rhymes
In March 1969, while Buba was busy in the quicksand of its swaps and forward dollar interventions, Netherlands Bank (the Dutch central bank) had instructed commercial banks in Holland to pull back funds from the eurodollar market in order to bring up their liquidity positions which had dwindled dangerously during this increasing currency chaos.

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