Tag Archive: money printing

It’s Only Paper, Market Report 27 Apr

2020-04-28

The response to the virus has added a new mechanism of capital consumption to the many we have documented over the years. Businesses are shut down, yet they continue to incur expenses. There is a popular misconception out there that this is merely a paper loss. One can almost picture a neutron bomb that somehow wipes out only paper, leaving all the physical assets and plant unscathed.

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The Out Has Not Yet Begun to Fall, Market Report 31 March

2020-04-02

by Keith Weiner

2020-04-02

So, the stock market has dropped. Every government in the world has responded to the coronavirus with drastic, if not unprecedented, violations of the rights of the people. Not to mention, extremely aggressive monetary policy. And, they are about to unleash massive fiscal stimulus as well (for example, the United States government is about to dole out over $2 trillion worth of loot).

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Big Trouble In QE Paradise

2019-10-07

by Jeffrey P. Snider

2019-10-07

Maybe it was a sign of things to come, a warning how it wasn’t going to go as planned. Then again, when it comes to something like quantitative easing there really is no plan. Other than to make it sound like there is one, that’s really the whole idea. Not what it really is and what it actually does, to make it appear like there’s substance to it.

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The Obligatory Europe QE Review

2019-09-13

by Jeffrey P. Snider

2019-09-13

If Mario Draghi wanted to wow them, this wasn’t it. Maybe he couldn’t, handcuffed already by what seems to have been significant dissent in the ranks. And not just the Germans this time. Widespread dissatisfaction with what is now an idea whose time may have finally arrived.

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Dollar Supply Creates Dollar Demand, Report 2 June

2019-06-03

by Keith Weiner

2019-06-03

We have been discussing the impossibility of China nuking the Treasury bond market. We covered a list of challenges China would face. Then last week we showed that there cannot be such a thing as a bond vigilante in an irredeemable currency. Now we want to explore a different path to the same conclusion that China cannot nuke the Treasury bond market.

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Brent’s Back In A Big Way, Still ‘Something’ Missing

2018-06-12

by Jeffrey P. Snider

2018-06-12

The concept of bank reserves grew from the desire to avoid the periodic bank runs that plagued Western financial systems. As noted in detail starting here, the question had always been how much cash in a vault was enough? Governments around the world decided to impose a minimum requirement, both as a matter of sanctioned safety and also to reassure the public about a particular bank’s status.

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Europe Is Booming, Except It’s Not

2017-11-07

by Jeffrey P. Snider

2017-11-07

Eurozone Gross Domestic Product, 1996 - 2017

European GDP rose 0.6% quarter-over-quarter in Q3 2017, the eighteenth consecutive increase for the Continental (EA 19) economy. That latter result is being heralded as some sort of achievement, though the 0.6% is also to a lesser degree. The truth is that neither is meaningful, and that Europe’s economy continues toward instead the abyss.

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Global Inflation Continues To Underwhelm

2017-10-19

by Jeffrey P. Snider

2017-10-19

Another Side of China, Aug 2016 - Oct 2017

Chinese producer prices accelerated in September 2017, while consumer price increases slowed. The National Bureau of Statistics reported this weekend that China’s PPI was up 6.9% year-over-year, a quicker pace than the 6.3% estimated for August and a 5.5% rate in July. Earlier in the year producer prices were driven mostly by 2016’s oil rebound, along with those in the rest of the global economy, but in recent months there has been more influence...

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The Power of Oil

2017-04-02

by Jeffrey P. Snider

2017-04-02

For the first time in 57 months, a span of nearly five years, the Fed’s preferred metric for US consumer price inflation reached the central bank’s explicit 2% target level. The PCE Deflator index was 2.12% higher in February 2017 than February 2016. Though rhetoric surrounding this result is often heated, the actual indicated inflation is decidedly not despite breaking above for once.

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Same Country, Different Worlds

2017-03-10

by Jeffrey P. Snider

2017-03-10

To my mind, “reflation” has always proceeded under false pretenses. This goes for more than just the latest version, as we witnessed the same incongruity in each of the prior three. The trend is grounded in mere hope more than rational analysis, largely because I think human nature demands it. We are conditioned to believe especially in the 21st century that the worst kinds of things are either unrealistic or apply to some far off location nowhere...

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Who Lends to the Fed?

This leads to our present question. To speak of borrowing and a ready market in which the Fed can borrow, means there is a lender. Who is the lender to the Fed?

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The 2015 Update: Risks on the Rising SNB Money Supply

We explain the risks on the rising money supply in Switzerland. We distinguish between broad money supply (M1-M3) and narrow money supply (M0). Both are rising quickly.

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Rising Sight Deposits at SNB Means Rising SNB Debt

Money creation and sight deposits may have two points of view: 1. The central bank creates money - i.e. the SNB decides to increase sight deposits when it does currency interventions 2. Commercial banks create money - inflows in CHF on Swiss bank accounts make those banks increase their "sight deposits at the SNB. If inflows in CHF are higher than outflows then CHF must rise, unless the central bank does currency interventions. We will present...

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The Last Free Lunch for Holders of SNB’s High-Risk Share?

Marc Meyer, the maybe strongest opponent of the Swiss National Bank criticizes the misleading vocabulary in monetary policy that confuses central bank liabilities with assets. He identifies the intrinsic and time value of the SNB share. According to Meyer, the recent strong share price performance was caused by the free lunch at the shareholder assembly.

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The Big Swiss Faustian Bargain: Differences between SNB, ECB and Fed Money Printing Explained

Potential losses due to money printing are for the Fed: 1.2% of GDP, Bundesbank: 5% of GDP, SNB: 12% of GDP.

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Definitions of money supply in the context of the SNB

Monetary Aggregates according SNB M0 M1 M2 M3

SNB Monetary Data Week October 26

2012-10-29

by George Dorgan

2012-10-29

Seasonal effects, the good months for the SNB and the US economy, but weaker ones for emerging markets and Switzerland Despite the seasonal effects between October and March, the SNB is not able to sell currency reserves consistently. Traditionally the USD gets stronger and stocks rise over the autumn months till January. This year’s stocks appreciation was possibly already anticipated …

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Who Has Got the Problem? Europe or Japan?

2012-10-23

by George Dorgan

2012-10-23

A couple of months ago the euro traded close to EUR/USD 1.20 and the whole world was betting on its breakdown. Once the euro downtrend ended thanks to QE3, OMT and euro zone current account surpluses, the common currency did not stop to appreciate against the yen and reached levels of EUR/JPY 104 and above. … Continue reading...

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