Home » Posts tagged 'money printing' (Page 16)
Tag Archives: money printing
The Triumph of Madness
The Triumph of Madness
Viewing the past through the lens of history is unfair to the participants. Missteps are too obvious. Failures are too abundant. Vanities are too absurd. The benefit of hindsight often renders the participants mere imbeciles on parade.
Was George Armstrong Custer really just an arrogant Lieutenant Colonel who led his men to massacre at Little Bighorn? Maybe. Especially when Sitting Bull, Crazy Horse, and numbers estimated to be over ten times his cavalry appeared across the river.
Were George Donner and his brother Jacob naïve fools when they led their traveling party into the Sierra Nevada in late fall? Perhaps. Particularly when they resorted to munching on each other to survive the relentless blizzard.
Certainly, Custer and the Donner brothers were doing the best they could with the information available to them. The decisions they made must have seemed reasoned and calculated at the time. But what they couldn’t see – until it was too late to turn back – was that with each decision, they unwittingly took another step closer to their ultimate demise.
Still they were human just like we are human…no smarter, no dumber. We’re not here to ridicule them; but rather, to learn from them.
A Good Man in a Bad Trade
Rudolf von Havenstein had been president of the Reichsbank – the German central bank – since 1908. He knew the workings of central bank debt issuances better than anyone. He was good at it.
Thus, when he was called upon by history to deliver a miracle for the Deutches Reich in the aftermath of WWI, he knew exactly what to do. He’d deliver monetary stimulus. In fact, he’d already been at it for several years.
On August 4, 1914, at the start of the war, the Goldmark – or gold-backed Reichmark – became the unbacked Papermark. With gold out of the picture, the money supply could be expanded to meet the endless demands of war.
…click on the above link to read the rest of the article…
Jim Bianco Says This Is QE, Like Y2K
Jim Bianco Says This Is QE, Like Y2K
In contrast to Hussman, Jim Bianco, at Bianco Research says the Fed’s repo actions are QE.
Earlier today I posted, Hussman Sides with Powell: It’s Not QE4.
If Hussman convinced you the Fed was not conducting QE, I will give you a chance to change your mind again.
“Not QE” Looks a Lot Like Y2K
This is a guest post by permission from Jim Bianco
Jim Bianco at Bianco Research says “Not QE” Looks a Lot Like Y2K
We would argue the special lending facility that started in late 1999 to support the feared Y2K computer glitch offers a historical analogy to the current period.
Stories 20 years ago sound like they are describing what is happening today:
Dow Jones News Service – (December 28, 1999) CASH IS FLOWING LIKE CHAMPAGNE FOR Y2K
The volume of cash that the Federal Reserve has temporarily given to banks to avert potential Year 2000 strains is rising to dizzying levels. Including nearly $20 billion it gave to the banking system in the form of term “repurchase” agreements Monday, the Fed has almost $100 billion in hard currency loans outstanding to banks. That’s the most money lent out through repurchase agreements ever, said Peter Bakstansky, spokesman for the New York Federal Reserve. For some perspective, the Fed had $23 billion in outstanding “repos” in December 1998, and around $9 billion in December 1997.
The Y2K special lending facility had a similar effect on the Fed’s balance sheet. It was also done for “plumbing reasons.”
And, as the [Champagne] story points out, the Fed supplied record amounts of repo never before seen at the time.
…click on the above link to read the rest of the article…
Will Modern Monetary Theory Blow Up the Dollar?
Will Modern Monetary Theory Blow Up the Dollar?
The idea of an ‘infinite’ money supply from federal printing presses is gaining ground among the radical left in Washington, D.C.
Commentary
“As long as the government can print money, we’ll never be broke.”
That’s the idea behind modern monetary theory (MMT) in a nutshell. Naturally, many of the nuts in Washington are starting to get behind this unhinged notion. That includes members of Congress such as Rep. Alexandria Ocasio-Cortez (D-N.Y.) and democratic presidential candidate Sen. Elizabeth Warren (D-Mass.).
An Economic Absurdity
Sure, a cluster of economists in and around Wall Street and Washington, D.C. are pushing this very dangerous set of policies that are dressed up in academic terminology such as “neo-Keynesianism” so that they sound almost sane. But MMT is as far from economic sanity as one can get. But let’s face it, Wall Street loves any idea that puts money into the market.
In essence, the main idea behind MMT is that any government spending can be paid for but with printed money. An in depth look into history—or even a brief one—shows that the absurd idea of printing unlimited amounts of money leads a nation into hyperinflation and economic ruin.
No Good Examples
A recent example would be Zimbabwe. Unjust land seizures leading to food shortages, price controls, and corruption led to massive deficit spending fueled by printing press money. A inflation rate of 98 percent every day destroyed the economy and the government’s credibility in running it.
…click on the above link to read the rest of the article…
A “Market” That Needs $1 Trillion in Panic-Money-Printing by the Fed to Stave Off Implosion Is Not a Market
A “Market” That Needs $1 Trillion in Panic-Money-Printing by the Fed to Stave Off Implosion Is Not a Market
It was all fun and games enriching the super-wealthy but now the karmic cost of the Fed’s manipulation and propaganda is about to come due.
A “market” that needs $1 trillion in panic-money-printing by the Fed to stave off a karmic-overdue implosion is not a market: a legitimate market enables price discovery. What is price discovery? The decisions and actions of buyers and sellers set the price of everything: assets, goods, services, risk and the price of borrowing money, i.e. interest rates and the availability of credit.
The U.S. has not had legitimate market in 12 years. What we call “the market” is a crude simulation that obscures the Federal Reserve’s Socialism for the Super-Wealthy: the vast majority of the income-producing assets are owned by the super-wealthy, and so all the Fed money-printing that’s been needed to inflate asset bubbles to new extremes only serves to further enrich the already-super-wealthy.
The apologists claim the bubbles must be inflated to “help” the average American, but that claim is absurdly specious. The majority of Americans “own” near-zero assets that earn income; at best they own rapidly-depreciating vehicles, a home that doesn’t generate any income and a life insurance policy that pays off only when they pass away.The average American uses the family home for shelter, and so its currently inflated price does nothing to improve the household income: it’s paper wealth, and we’ve already seen how rapidly that paper wealth can vanish when Housing Bubble #1 popped. (Housing Bubble #2 is currently sliding toward the edge of the abyss.)
Were legitimate price discovery allowed, the asset bubbles would pop, and the real-world impact on the average household that owns essentially zero income-producing assets would be minimal.
…click on the above link to read the rest of the article…
Every Bubble Eventually Finds its Pin
Every Bubble Eventually Finds its Pin
The transfer of wealth from workers and savers to governments and big banks continued this week with Swiss-like precision. The process is both mechanical and subtle. Here in the USA the automated elegance of this ongoing operation receives little attention.
NFL football. EBT card acceptance at Del Taco. Adam Schiff’s impeachment extravaganza. You name it. Bread and circuses like these – and many others – offer the American populace countless opportunities for chasing the wild goose.
All the while, and with little fanfare, debts pile up like deadwood in Sequoia National Forest. These debts, both public and private, stand little chance of ever being honestly repaid. According to the IMF, global debt – both public and private – has reached an all-time high of $188 trillion. That comes to about 230 percent of world output.
Certainly, some of the private debt will be defaulted on during the next credit crisis and depression. But when it comes to the public debt, governments do everything they can to prevent an outright default. Central banks crank up the printing press and attempt to inflate it away.
After Nixon temporarily suspended the Bretton Woods Agreement in 1971, the money supply could be expanded without technical limitations. This includes issuing new debt to pay for government spending above and beyond tax receipts. Hence, since 1971, government directed money supply inflation has been the standard operating procedure in the U.S. and much of the world.
Downright Disgraceful
Expanding the money supply has the effect of dissipating wealth from the currency. The process allows governments, which are first in line to spend this newly created money, a back door into your bank account. Without levying taxes, they get access to your wealth and future earnings and leave you with money of diminished value.
…click on the above link to read the rest of the article…
America’s trade policy will end up destroying the dollar
America’s trade policy will end up destroying the dollar
America’s tariffs against China are already showing signs of undermining the global economy and will create a funding crisis for the Federal Government when it leads to foreigners no longer buying US Treasury debt and selling down their existing dollar holdings. A subversive attempt by America to divert global portfolio investment from China by destabilising Hong Kong will force China into a Plan B to fund its infrastructure plans, which could involve actively selling down her dollar reserves and hastening the introduction of a new crypto-based trade settlement currency.
The US budget deficit will then be financed entirely by monetary inflation. Furthermore, the turn of the credit cycle, made more destructive by trade tariffs, is driving the global and US economy into a slump, further accelerating all indebted governments’ dependency on inflationary financing. The end result is America’s trade policies have been instrumental in hastening the end of the dollar as the world’s reserve currency, ultimately leading to its destruction.
Introduction
For almost two years President Trump has imposed various tariffs on imported Chinese goods. He advertised his tactics as hardball from a tough president who knows the art of the deal, taking his business acumen and applying it to foreign affairs. He even proudly described himself as a tariff man.
His opening gambit was to impose tariffs on some goods to get leverage over the Chinese, with the threat that if they didn’t cooperate, then further tariffs would be introduced. The Chinese declined to be cowed by threats, introducing tariffs themselves on US imports, particularly agricultural products, to bring pressure to bear in turn on President Trump.
…click on the above link to read the rest of the article…
Blain’s Morning Porridge – Nov 15th 2019
Blain’s Morning Porridge – Nov 15th 2019
“Liberty, equality, fraternity, or death; the last, much the easiest to bestow, O Guillotine!”
As it’s a Friday I am contractually entitled to have a rant and whine about whatever I want to write about. Which, today, isn’t really the cut and thrust of markets.
To be brutally frank – we all know what the problems are: Too much money in the markets pushing up the prices of market assets. The fact is too much of that too much money is owned by too few people who use their too much money to buy all these financial assets. These too few people who own all the financial assets get richer everyday as their too much money makes their too many financial assets even more valuable. And these too few people get even richer by getting even more too much money to put into the already too expensive financial markets by “persuading” central banks to keep rates low, to buy financial assets through QE, and get their in-the-pocket politicians to enact tax cuts so their too much money is even more too much money…
With me so far??
Meanwhile, politicians pay for the too much money they give to too rich people, by taking it away from the much more numerous too many too poor people through Austerity. The too many people who don’t have any assets and owe any money they have to the people who have too much money and too many assets – aren’t happy. They blame society, they blame governments and as they get even more unhappy they get angry. These too poor too angry people then get very angry and start blaming people. which is what is happening across the globe..
Still there?…
…click on the above link to read the rest of the article…
Swiss National Bank’s Monetary Racket, US Stock Holdings & the Wild Ride of its Own Shares
Swiss National Bank’s Monetary Racket, US Stock Holdings & the Wild Ride of its Own Shares
We’ll also look at its garbage pile at the bottom. These folks don’t even pretend to be stock pickers. They buy and let it stick till it falls off on its own.
The Swiss National Bank, which filed its disclosure of US stock holdings today with the SEC, has figured out the best money racket of all times. It works because currency speculators are eagerly gobbling up Swiss francs. In January 2015, the SNB started to print Swiss francs ostensibly to depress the value of the CHF, a tiny currency with huge global demand. It then began selling those francs for dollars, euros, and other currencies to buy securities denominated in those currencies. This monetary racket only works as long as there is endless global demand for the tiny currency.
The SNB doesn’t disclose its holdings of securities. But in the US, it has to disclose its holdings of US-traded stocks via a quarterly 13F filing with the SEC. So we know what US-traded stocks it owns, but this is just a slice of the securities it owns globally.
In its 13F filing today, the SNB revealed that it held 2,520 US-traded stocks and American Depositary Receipts (ADRs) of foreign companies at the end of the third quarter, of about 3,500 stocks traded in the US. The value of these holdings rose 1.5% during the third quarter to a record of $94.1 billion.
Its portfolio is loaded up with the FANGMAN stocks – Facebook, Amazon, Nvidia, Microsoft, Alphabet, and Netflix – with Apple and Microsoft as its largest positions. It also holds a number of ADRs, including ADRs of Chinese companies, such was Weibo, Alibaba (16th largest holding), Baozun, ZTO Express Cayman, and Huazhu Group.
…click on the above link to read the rest of the article…
The Fed is Lying to Us
The Fed is Lying to Us
“When it becomes serious, you have to lie”
The recent statements from the Federal Reserve and the other major world central banks (the ECB, BoJ, BoE and PBoC) are alarming because their actions are completely out of alignment with what they’re telling us.
Their words seek to soothe us that “everything’s fine” and the global economy is doing quite well. But their behavior reflects a desperate anxiety.
Put more frankly; we’re being lied to.
Case in point: On October 4, Federal Reserve Chairman Jerome Powell publicly claimed the US economy is “in a good place”. Yet somehow, despite the US banking system already having approximately $1.5 trillion in reserves, the Fed is suddenly pumping in an additional $60 billion per month to keep things propped up.
Do drastic, urgent measures like this reflect an economy that’s “in a good place”?
The Fed’s Rescue Was Never Real
Remember, after a full decade of providing “emergency stimulus measures” the US Federal Reserve stopped its quantitative easing program (aka, printing money) a few years back.
Mission Accomplished, it declared. We’ve saved the system.
But that cessation was meaningless. Because the European Central Bank (ECB) stepped right in to take over the Fed’s stimulus baton and started aggressively growing its own balance sheet — keeping the global pool of new money growing.
Let’s look at the data. First, we see here how the Fed indeed stopped growing its balance sheet in 2014:
And we can note other important insights in this chart.
For starters, you can clearly see how in 2008, the Fed printed up more money in just a few weeks than it had in the nearly 100 years of operations prior.
…click on the above link to read the rest of the article…
Monetary failure is becoming inevitable
Monetary failure is becoming inevitable
This article posits that there is an unpleasant conjunction of events beginning to undermine government finances in advanced nations. They combine the arrival of a long-term trend of rising welfare commitments with an increasing certainty of a global-scale credit crisis, in turn the outcome of a combination of the peak of the credit cycle and increasing trade protectionism. We see the latter already undermining the global economy, catching both governments and investors unexpectedly.
Few observers seem aware that an economic and systemic crisis will occur at a time when government finances are already precarious. However, the consequences are unthinkable for the authorities, and for this reason it is certain such a downturn will lead to a substantial increase in monetary inflation. The scale of the problem needs to be grasped in order to assess how destructive it will be for government finances and ultimately state-issued currencies.
Introduction
Listening to recent commentaries about the repo failures in New York leads one to suppose there is insufficient money in the system. This is not the real issue, as the chart below of the fiat money quantity for the dollar clearly shows.
The fiat money quantity is the amount of fiat money (in this case US dollars) both in circulation and held in reserve on the central bank’s balance sheet. Before the Lehman crisis, it grew at a fairly constant compound growth rate of 5.86%. Since the Lehman crisis, it has grown at an average of 9.45%, even after the slowdown in its rate of growth that started in January 2017. FMQ is still $5 trillion above where it would have been today if the massive monetary expansion in the wake of the Lehman crisis had not happened. If there is a shortage of money, it is because the process of debt creation to fund current expenditure is spiralling out of control.
…click on the above link to read the rest of the article…
More Money Pumping Won’t Make Us Richer
More Money Pumping Won’t Make Us Richer
Whenever a central bank introduces easy monetary policy, as a rule this leads to an economic boom — or economic prosperity. At least this is what most commentators hold. If this is however the case then it means that an easy monetary policy can grow an economy.
But loose monetary policies do not generate economic growth. These policies set in motion the diversion of real savings from wealth generators to the holders of the newly pumped money. Real savings, rather than supporting individuals that specialize in the enhancement and expansion of the infrastructure are consumed by various individuals that are employed in non-wealth generating activities.
Moreover, not all consumption is a good thing. The consumption of real savings by individuals engaged in the enhancements and the expansion of the infrastructure is productive consumption. Conversely, the consumption of real savings by individuals that are employed in non-wealth generating activities is non-productive consumption.
It is non-productive consumption that sets the foundation for the weakening of the existing infrastructure thereby weakening future economic growth. In contrast, productive consumption sets the foundation for a better infrastructure, which permits stronger future economic growth. Needless to say, productive consumption leads to the increase in individuals living standards while non-productive consumption results in the lowering of living standards.
Why then is loose monetary policy seen as a major contributor towards economic growth?
Given that economic growth is assessed by means of the gross domestic product (GDP) framework — which is nothing more than a monetary turnover — obviously then when the central bank embarks on monetary pumping (i.e., loose monetary policy) it strengthens the monetary turnover in the economy and thus GDP.
…click on the above link to read the rest of the article…
FIAT CURRENCY ENDGAME: You Will Not Like This ONE BIT!
FIAT CURRENCY ENDGAME: You Will Not Like This ONE BIT!
No One Comes Back From This Uninjured. In one word, the devaluation is set to ESCALATE.
In fact, I term it Competitive Devaluation. There are several countries that will be the pioneers of it, but it will eventually reach the United States of America. In Europe and in Japan, we are closer to seeing it happening; in the next 2-5 years, you’ll hear about governments’ first official plans to do this.
They will NOT alert the media to notify the public to own gold and silver. They haven’t thus far (and they won’t going forward, either), and meanwhile they’ve been accumulating them at the fastest pace in more than half a century.
The central banks want to buy gold, uninterrupted. Since they do not buy silver, the mania that will ensue in that niche market will be huge.
Not just gold and silver stand to gain from devaluation; companies that are able to increase prices and not lose consumers will be great winners as well. These are the world-dominators with pricing power, and I will profile my top-5 holdings for the Endgame Decade (2020-2029) in a Special Report due to be published by September 30th.
Real estate prices in metropolitan areas will also continue to rise; these are hard assets that are difficult to increase in supply, but my analysis is that of the three – world-class companies, precious metals, and real estate, silver will be the BEST PERFORMER.
Central banks are not able to inflate the real debt levels away. The most extreme case of this is Japan, whose central bank has done ALMOST everything under the sun to relieve the country of its deflationary spiral and has failed miserably.
…click on the above link to read the rest of the article…
Suffering the Profanity of Plentiful Cheap Money
Suffering the Profanity of Plentiful Cheap Money
What if the savings in your bank account lost 55 percent of its value over the last 12 months? Would you be somewhat peeved? Would you transfer some of your savings to another currency?
That was the favored approach in Argentina – where the official inflation rate’s 55 percent. But no more. On September 2, President Mauricio Macri resorted to capital controls to preserve the central bank’s foreign exchange reserves and prop up the peso. What gives?
Just fifteen months ago Macri secured the biggest bailout in the International Monetary Fund’s history. Now Argentina’s delaying payment to its creditors and is rapidly approaching what will be its third sovereign default this century. On top of that, Macri’s Peronist rival Alberto Fernández will likely take his job come election day in October.
Alas, for Macri and his countrymen, a painful lesson is being exacted. You can’t solve a debt problem with more debt. Eventually the currency buckles and you’re left with two poisons to pick from: inflation or default. With Macri’s latest capital controls scheme he’s choosing to take swigs of both.
Make of Argentina’s woes what you will. Central bankers in the United States are also guilty of programs of mass money debasement. They may have a bigger economy to better mask their malice. But despite what the MMT delusionals say the day of reckoning always arrives – and always at the worst possible time.
Indeed, the U.S. dollar hasn’t lost 55 percent of its value over the last 12 months. However, according to the Bureau of Labor Statistics’ own inflation calculator, the dollar’s lost 55 percent of its value since 1988. In other words, it takes $1 to purchase what $0.45 could buy during President Reagan’s last year in office.
…click on the above link to read the rest of the article…
Entering Period of Perpetual Money Printing – John Williams
Entering Period of Perpetual Money Printing – John Williams
Economist John Williams says be careful what you wish for when it comes to Federal Reserve interest rate cuts. Williams explains, “Unless you can get a good healthy consumer, you are not going to get a good healthy economy. It’s that simple. I think the Fed recognizes that, but they want to get rates higher because that will help the banking system. It will help make lending a little easier and start to return the system to normal. The problem with them backtracking now is the Fed may not ever be able to go back and do what they did before. We may be entering a period of perpetual quantitative easing (money printing). That changes the ballgame, and I am not sure where that’s going to go. It’s not as happy as it would have been if we had gone through a transition where bad parts of the banking system failed and you rebuilt and had a strong buildup from there with the economy and everything else. . . . Perpetual quantitative easing (money printing) is frightening, and it’s a new world. No one has ever seen anything quite like this.”
Williams says all his data is showing the economy is already faltering. Williams point out, “If you believe the GDP numbers, the economy has expanded 25% since the Great Recession, but there is no other number that shows that. . . . I have been contending that we are heading into a new recession. What I am looking at in recovery is that the economy has never really recovered. . . . . The Fed raised rates too much in too fast of a period of time. Had they stretched that over a couple of more years instead of trying to get things back to normal in two years, that might have worked better. What they did was effectively crashed the economy.”
…click on the above link to read the rest of the article…
