Central Banks are in VERY serious trouble
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H/t reader squodgy:
“Brave Lady, and very logical. No more than ONE YEAR LEFT.
Of course, if the banksters hadn’t printed helicopter money, it would have been 2009, but hey, it’s anyone’s guess, and the real truth (rather than the newspeak) tells anyone with a modicum of common sense to keep preparing.”
Not much time.
Since early July, the 30-year US Treasury Bond Price Index has plunged 8.3%. It’s now called “the rout” in longer-dated government bonds. One of the specters is rising inflation at a time of ultra-low yields.
What has become the number one predictor of a bear market in stocks over the past many decades? The US Treasury yield curve. It drives bank lending – which can strangle the economy. But this time, the risks are much higher, and the potential economic consequences steeper.
In a Fed Staff working paper released over the weekend titled “Gauging the Ability of the FOMC to Respond to Future Recessions” and penned by deputy director of the division of research and statistics at the Fed, the author concludes that “simulations of the FRB/US model of a severe recession suggest that large-scale asset purchases and forward guidance about the future path of the federal funds rate should be able to provide enough additional accommodation to fully compensate for a more limited [ability] to cut short-term interest rates in most, but probably not all, circumstances.”
Jul 26, 2016
In this special 2016 Summer Solutions episode, Max and Stacy talk to Das, author of ‘A Banquet of Consequences: The Reality of Our Unusually Uncertain Economic Future’, about the structural changes needed to halt the decline in real wages. They also discuss financialization, economic apartheid and debt jubilees.
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Real Vision TV’s Grant Williams offers a true look into what is known as an absurd debt level and unimaginable central bank manipulation. Less than a week ago we highlighted Grant’s comments on commodities. Although the information contained in the video below is nothing new to Zero Hedge, we do enjoy the way the information is presented. Set aside some time to listen as Grant tells a story about debt and the current investment landscape.
Grant sees people “with more power than you can possibly imagine” as the ones responsible for experimental economics that led the world down a path of self destruction.
“I don’t think there is any argument about whether or not the central bankers of the world should have done something in 2008. The question is ‘should they still be doing it 8 years later‘?”
We recommend viewing the entire clip
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“When a country embarks on deficit financing (Obamanomics) 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
“Deficits mean future tax increases, pure and simple. Deficit spending should be viewed as a tax on future generations, and politicians who create deficits should be exposed as tax hikers.”
– Ron Paul
“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
“Capital must protect itself in every way… Debts must be collected and loans and mortgages foreclosed as soon as possible. When through a process of law the common people have lost their homes, they will be more tractable and more easily governed by the strong arm of the law applied by the central power of leading financiers. People without homes will not quarrel with their leaders. This is well known among our principle men now engaged in forming an imperialism of capitalism to govern the world. By dividing the people we can get them to expend their energies in fighting over questions of no importance to us except as teachers of the common herd.”
– J. P. Morgan
“We have in this country one of the most corrupt institutions the world has ever known. I refer to the Federal Reserve Board and the Federal Reserve Banks, hereinafter called the FED. They are not government institutions. They are private monopolies which prey upon the people of these United States for the benefit of themselves and their foreign customers.”
– Louis McFadden
“It was not accidental [the 1929 stock-market “crash”]. It was a carefully contrived occurrence. … The international bankers sought to bring about a condition of despair here so that they might emerge as rulers of us all.”
– Louis McFadden
“What good fortune for governments that the people do not think.”
– Adolf Hitler
The dollar’s recent rapid slide has been accompanied by a constant backdrop of dovish cooing from the Fed. Until this week, SocGen’s Albert Edwards notes that both equity and commodity markets had embraced the weak dollar as the elixir to solve all their ills. That relief, however, has now proved fleeting as fear of weak economic activity has reasserted its influence on investors. The weak dollar, Edwards warns, should be seen as merely a shuffling of deckchairs on the Titanic before the global economy sinks below the icy waves.
Since the Fed may not, or simply refuses, to see if not a bubble then at least “froth” in any asset class, perhaps it should hire Peter Thiel to be on its macroproduential supervisory committee, because according to the venture capital legend who co-founded PayPal everything is overvalued. Speaking at the LendIt USA Conference in San Francisco on Tuesday, he said that he is “somewhat concerned about the frothiness of the markets” and adds that “startup tech stocks may be overvalued, but so are public equities, so are houses, so are government bonds.”
He adds that “if there is a bubble it is probably centered on the zero % interest rates, the quantitative easing, the money printing and that’s a very strange one because it permeates everything.”
By Reggie Middleton
It’s official, I’m calling a banking crisis in Europe. Things didn’t go well the last time I did this. Of course, many will say, “But the rating agencies have learned their collective lessons. They would most assuredely warn us if the European banks are close to going bust, right?!!!”. Yeah, right! Reference our past research note on so-called trusted parties in private blockchains for banks. Those interested in purchasing the 22 page report on what is likely the first major bank to fall victim to the coming Pan-European Banking Crisis can do so here. All others, feel free to read on…
Here are some key points:
Just like binge drinking destroys the human body, so does Keynesian binge drinking (deliberately) destroy the entire financial system.
Have you ever wondered who these people are? The people who decide how much capital should cost, how much credit and cash should be issued. You know, the twits who dream up QE, ZIRP and NIRP.
Where do they come from? Who pays their wages? Where do they get these hair-brained ideas? Are they on medication?
Sadly we probably know most of the answers…
After seven years of benefiting from the greatest transfer of wealth in history, the U.S. banking industry topped it off with record profits in 2015. The Great Fleecing may have reached its height just as the scheme known as Quantitative Easing ran out of gas.
“The U.S. banking industry earned net income of $163.63 billion in 2015, the highest net income of any year in the SNL bank regulatory database, which dates back to 1991…
The largest four banks, JPMorgan Chase Bank NA, Bank of America NA, Wells Fargo Bank NA and Citibank NA together earned 42.7% of the industry’s income in 2015.”
This bonanza stands in stark contrast to the plight of the middle class, whose wages have stagnated while health insurance costs reach crippling proportions. Wealth inequality in the U.S. has greatly expanded–a trend that defines countries with Quantitative Easing (QE) programs.
… as planned by TPTB.
William R. White is the chairman of the Economic and Development Review Committee at the OECD in Paris. Prior to that, Dr. White held a number of senior positions with the Bank for International Settlements (“BIS”), including Head of the Monetary and Economic Department, where he had overall responsibility for the department’s output of research, data and information services, and was a member of the Executive Committee which manages the BIS. He retired from the BIS on 30 June 2008.
Dr. White began his professional career at the Bank of England, where he was an economist from 1969 to 1972. Subsequently he spent 22 years with the Bank of Canada. In addition to his many publications, he speaks regularly to a wide range of audiences on topics related to monetary and financial stability.
In the following interview he shares his views in a totally personal capacity on the current state of the global economy and related monetary and fiscal policies.
“We have reached that fork in the road within the monetary twilight zone, where Europe’s largest bank is openly defying central bank policy and demanding an end to easy money. Alas, since tighter monetary policy assures just as much if not more pain, one can’t help but wonder just how the central banks get themselves out of this particular trap they set up for themselves.”
The current melt-down of the world’s debt bubble is likely to continue in the course of the next months. The secular trend to expansion of credit has morphed into contraction and liquidation. It is my opinion that the new trend is now established and no action by any of the Central Banks (CB) that issue reserve currencies will do anything at all to reverse that trend.
Sandeep Jaitly thinks that the desperate reserve-issuing CBs – the US Fed, the ECB, the Bank of England and the Japanese CB – may resort to programs of QEP, by which he means “Quantitative Easing for the People”. This quantitative easing will mean putting money into the hands of the populations by rebates on taxes, invented make-work schemes or any other excuse to furnish the people with the famous “helicopter money”, to get them to spend.
For now, negative rates as a policy tool remain a “work in progress”, judging by the current inflation levels across Europe. But the rise in household savings rates amid so much central bank support is paradoxical to us, and mimics what we highlighted in the credit market earlier this year. Companies in Europe are deleveraging, not releveraging, and are buying back bonds not stock.
You can’t make this stuff up.
– Buiter: Only “Helicopter Money” Can Save The World From The Next Recession (ZeroHedge, Sep 9, 2015):
It is to be expected that economists – even economists working for the same team – have different views about the likelihood of different future outcomes. Economics isn’t rocket science, and even rockets frequently land in the wrong place or explode in mid-air.
That rather hilarious characterization of the pseudoscience that is economics comes from the desk of Citi’s Chief Economist Willem Buiter and it’s apparently evidence that even if you don’t think too much of his views on “pet rocks” (gold is a 6,000 year-old bubble) or on the efficacy and/or utility of physical banknotes (ban cash), you’d be hard pressed to disagree with him when it comes to critiquing his profession. Of course we don’t want to give Buiter too much credit here because the quote shown above could simply be an attempt to stamp a caveat emptor on his latest prediction in case, like his predictions on when Greece would ultimately leave the euro, it turns out to be wrong.