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Does money grow on trees? | openDemocracy

November 18, 2014

Does money grow on trees? | openDemocracy.

The debate about the banks’ power to create money is becoming much more mainstream. After the recent event, Does Money Grow on Trees?, parliament is scheduled to debate the issue for the first time in 170 years.

This was a question posed by Martin Wolf, chief economics commentator of the Financial Times, at the beginning of the event Does Money Grow on Trees?organised by Positive Money and the Institute of Chartered Accountants for England and Wales (ICAEW). Over 100 people turned out to discuss what Wolf described as the ‘fascinating intellectual questions’ associated with permanently taking power to create money away from banks and giving it to the state.

As Ben Dyson, founder of Positive Money has explained in a previous article for Open Democracy, banks currently create 97% of the money in our system when they issue loans. Positive Money, a campaign and research organisation set-up in 2009, argues that leaving the power to create money in the hands of the financial institutions that caused the economic crisis is a mistake – and one that not enough people understand. Results of a recent Dodds Monitoring poll show that only 1 in 10 MPs accurately understand where money comes from. Positive Money highlights the causal relationship between the current monetary system and instability in the economy, high house prices and increasing inequality, arguing that without an understanding of money creation our MPs are ill-equipped to prevent another financial crisis.

…click on the above link to read the rest of the article…

Hato No Naka No Neko (ハトの中の猫) | Things That Make You Go Hmmm… Investment Newsletter | Mauldin Economics

November 14, 2014

Hato No Naka No Neko (ハトの中の猫) | Things That Make You Go Hmmm… Investment Newsletter | Mauldin Economics.

Last week, appropriately enough on Halloween, the Bank of Japan did something truly scary.

As shocks go, this one — though it had been fairly well-telegraphed to the markets that something wicked this way might be coming — was in a league of its own.

Kuroda%20Halloween.psd

I’m sure that by now you’re well aware of what Kuroda-san (the Governor of the Bank of Japan) announced to the world; but in case you’re not, here’s a little recap:

(Japan Times): The bank will “enter a new phase of monetary easing in terms of quantity and quality,” Kuroda said…. “This is coming from a different level in both quality and quantity,” Kuroda told reporters after the two-day Policy Board meeting. “We have put forward everything there is to do at this point,” he said….

The former chief of the Asian Development Bank said the BOJ will aim to expand the amount of outstanding JGBs by hiking purchases to an annual pace of ¥50 trillion.

…click on the above link to read the rest of the article…

QE Is Dead… Long Live QE! « The Burning Platform

November 9, 2014

QE Is Dead… Long Live QE! « The Burning Platform.

[N]othing is more essential than that permanent, inveterate antipathies against particular nations and passionate attachments for others should be excluded, and that in place of them just and amicable feelings toward all should be cultivated. The nation which indulges toward another an habitual hatred or an habitual fondness is in some degree a slave.

– George Washington’s farewell address

Dear Diary,

QE is dead. Long live QE!

This time it was the European Central Bank that bought the drinks. US investors bellied up to the bar and helped themselves; the Dow rose 69 points. Gold kept slipping.

Since the Fed ended its QE program, the Bank of Japan and the ECB have come forward promising more money for stock markets.

Draghi has faced increased pressure to do more to support a slowing euro-zone economy after the Bankof Japan last week unexpectedly announced it would add the equivalent of another $730 billion to itsbalance sheet.

And at the end of its two-day policy meeting yesterday, the ECB announced a plan to buy another €1 trillion in asset-backed securities. This will bring the ECB’s balance sheet back to 2012 levels.

…click on the above link to read the rest of the article…

Complexity: The Hidden Cost of Central Bank Actions | Enterprising Investor

October 31, 2014

Complexity: The Hidden Cost of Central Bank Actions | Enterprising Investor.

Central banks are printing rules almost as fast as they’re printing money. The consequences of these fast-multiplying directives — complicated, long-winded, and sometimes self-contradictory — is one topic at hand. Manipulated interest rates is a second. Distortion and mispricing of stocks, bonds, and currencies is a third. Skipping to the conclusion of this essay, Grant’s is worried.

“One would not think at first sight that government had much to do with the trade of banking,” Walter Bagehot, the famed Victorian writer on finance, mused a century and a half ago. As time rolls on and regulation gives way to regimentation, the question presents itself: Do bankers have much to do with the trade of banking anymore?

One sees a certain measure of justice in the humbling of the regulated financial titans who put themselves in this position of vulnerability; many of them were going broke. Then, again, there’s irony in the regulatees ceding power to the regulators. The latter seemed to know even less about the corrupted structure of money and credit than the former.

…click on the above link to read the rest of the article…

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