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Ultra-loose monetary policy stopped being appropriate long ago, and is especially inadvisable now, with the global economy – especially the developed world – experiencing an increasingly strong recovery. As recent stock-market turbulence shows, refusal to normalize policy faster is drastically increasing the risks to financial stability.

FRANKFURT – The Dow Jones Industrial Average’s recent “flash crash,” in which it plunged by nearly 1,600 points, revealed just how addicted to expansionary monetary policy financial markets and economic actors have become. Prolonged low interest rates and quantitative easing have created incentives for investors to take inadequately priced risks. The longer those policies are maintained, the bigger the threat to global financial stability.

The fact is that ultra-loose monetary policy stopped being appropriate long ago. The global economy – especially the developed world – has been experiencing an increasingly strong recovery. According to the International Monetary Fund’s latest update of its World Economic Outlook, economic growth will continue in the next few quarters, especially in the United States and the eurozone.

Yet international institutions, including the IMF, fear the sudden market corrections that naturally arise from changes in inflation or interest-rate expectations, and continue to argue that monetary policy must be tightened very slowly. So central banks continue to postpone monetary-policy normalization, with the result that asset prices rise, producing dramatic market distortions that make those very corrections inevitable.

To be sure, the US Federal Reserve has moved away from monetary expansion since late 2013, when it began progressively reducing and ultimately halting bond purchases and shrinking its balance sheet. Since the end of 2015, the benchmark federal funds rate has been raised to 1.5%.

But the Fed’s policy is still far from normal. Considering the advanced stage of the economic cycle, forecasts for nominal growth of more than 4%, and low unemployment – not to mention the risk of overheating – the Fed is behind the curve.

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

Yuan-Priced Crude Futures Could Arrive Before Christmas

December 18, 2017

Yuan-Priced Crude Futures Could Arrive Before Christmas

After years of setbacks and delays, China may be days away from launching a yuan-priced crude oil futures contract to make its currency more international and challenge the dominance of the petrodollar.

Many Chinese investors eagerly anticipate the start of yuan oil futures trading on the Shanghai International Energy Exchange, with hope it will come just in time for Christmas, when western markets will be either closed or calmer than usual.

Although local investors can’t wait to pour yuan into another commodity contract, international investors may not be as eager because it is not clear yet how much freedom China would allow in that trade. International traders may have to swallow Chinese intervention on the markets or rigid capital controls, Bloomberg reported last week.

In July, the Shanghai International Energy Exchange, INE, completed a four-step trial in crude oil futures denominated in yuan and said that it would carry preparatory works for the listing of crude oil futures, and would try to launch the contract by the end of this year.

The launch of the yuan oil futures contract will be a wake-up call for traders and investors who haven’t been paying attention to Chinese plans to create the so-called petroyuan and shift oil trade out of petrodollars, Adam Levinson, managing partner and chief investment officer at hedge fund manager Graticule Asset Management Asia (GAMA), said in October.

Although the petroyuan is not expected to immediately supplant the petrodollar, the world’s top oil importer launching a crude oil futures contract in its domestic currency is a sign that the Chinese want their yuan to play an increasingly important role in global trade, starting with the oil trade.

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

Transparent citizens, negative interest rates and other crazy ideas of economic experts

December 17, 2017

Transparent citizens, negative interest rates and other crazy ideas of economic experts

In a March paper, Alexei Kireyev of the International Monetary Fund advises abolishing cash without having the citizens aware of the process. First, large banknotes are to be withdrawn from circulation, next limits on cash transactions are to be imposed, then computerization of the world’s financial system and control of international cash transactions are to be enforced and, finally, private companies are to be encouraged to avoid cash transactions The Macroeconomics of De-Cashing.

Kireyev draws on the ideas of former IMF chief Kenneth Rogoff. In his 2016 book “The Curse of Money”, he advocated the abolition of cash. In his opinion, it would contribute to the fight against crime, tax evasion and the reduction of the grey area. The ECB obliged him and promised not to print the 500 euro note after 2018. The government of India did the same thing: on November 9,2016, it unexpectedly devaluated all 500 and 1000 rupee banknotes over the night – a severe blow against the black economy and corruption. The next day, chaos reigned on India’s streets – crowds of people in front of banks, empty ATMs – everyone wanted to withdraw his money, exchange the old rupees for new, valid ones, and there were even casualties.¹⁾

The other governments eagerly followed this ideas of great economic gurus, not worrying about what was happening in the Indian streets: Australia wants to withdraw its 100 notes from circulation,²⁾and Venezuela has already abolished the 100 bolivar note. France, Italy, Spain and Greece already have ceilings for cash withdrawals, and a ceiling of EUR €5000 is currently being discussed in Germany. In some countries, the renunciation of cash is becoming a means of political struggle. In Poland, Prime Minister Mateusz Morawiecki introduced cashless payments to the state postal service. Soon it will also be possible to pay his tickets directly on the patrol car.

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

IMF Stress Tests Find $280 Billion Black Hole In Chinese Banks’ Capital

December 8, 2017

IMF Stress Tests Find $280 Billion Black Hole In Chinese Banks’ Capital

The IMF released a new analysis on the instability stability of the Chinese financial system. Speaking to the media in an online briefing, some of the insights from Ratna Sahay, deputy director of the IMF’s Monetary and Capital Markets Department, hardly advanced our knowledge much.

Sahay noted that “Risks are large. Having said that, the authorities are really aware of risks and they are working proactively to contain these risks.”

That’s why the authorities are finally racing to contain the worst excesses of China’s insane credit boom following October’s Party Congress, for example overhauling the $15 trillion shadow banking and asset management sector. As we noted on the latter, the new measures don’t take effect until the end of June 2019, no doubt reflecting the enormity of the problems uncovered by Chinese regulators.

Sahay pointed to three main risks: credit growth, the complex and opaque financial system and implicit guarantees which “encourage excessive risk-taking” (think WMPs).

However, the IMF does a better job in explaining why a massive financial crisis in China is all but inevitable – the conflicting needs of social stability versus financial stability. According to Reuters.

But the near-term prioritisation of social stability seems to depend on credit growth to sustain financing to firms even when they are non-viable, it said. “The apparent primary goals of preventing large falls in local jobs and reaching regional growth targets have conflicted with other policy objectives such as financial stability,” the report said. “Regulators should reinforce the primacy of financial stability over development objectives,” the fund said.

Too late.

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

The Economic End Game Continues

November 3, 2017

The Economic End Game Continues

In November of 2014 I published an article titled ‘The Economic End Game Explained’. In it I outlined what I believed would be the process by which globalists would achieve what they call the “new world order” or what they sometimes call the “global economic reset.” As I have shown in great detail in the past, the globalist agenda includes a fiscal end game; a prize or trophy that they hope to obtain. This prize is a completely centralized global economic structure, rooted in a single central bank for the world, the removal of the U.S. dollar as world reserve currency, the institution of the SDR basket system which will act as a bridge for single a global currency supplanting all others and, ultimately, global governance of this system by a mere handful of “elites.”

The timeline for this process is unclear, but there is some indication of when the “beginning of the end” would commence. As noted in the globalist owned magazine The Economist, in an article titled “Get Ready For The Phoenix,” the year of 2018 seems to be the launching point for the great reset. This timeline is supported by the numerous measures already taken to undermine dollar dominance in international trade as well as elevate the International Monetary Fund’s SDR basket. It is clear that the globalists have deadlines they intend to meet.

That said, there have been some new developments since I wrote my initial analysis on the end-game strategy that I think merit serious attention. The end game continues, faster than ever before, and here are some of the indicators showing that the “predictions” of the globalists at The Economist in 1988 were more like self-fulfilling prophecies and 2018 remains a primary nexus point for a re-engineering of our economic environment.

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

Second Crash Warning From The IMF – This Time It’s About Vol

October 31, 2017

Second Crash Warning From The IMF – This Time It’s About Vol

Another week, another warning regarding financial crash scenarios from those keen minds at the IMF.

In “Here Is The IMF’s Global Financial Crash Scenario” last week, we highlighted the institution’s surprisingly candid discussion hidden away in its latest Financial Stability Report “Rising Medium-Term Vulnerabilities Could Derail the Global Recovery”…or as we paraphrased the IMF’s “politically correct way of saying the financial system is on the verge of crashing”.

As we noted previously, in the section also called “Global Financial Dislocation Scenario” because “crash” sounds just a little too pedestrian, the IMF uses a DSGE model to project the current global financial situation, and ominously admits that “concerns about a continuing buildup in debt loads and overstretched asset valuations could have global economic repercussions” and – in modeling out the next crash, pardon “dislocation” – the IMF conducts a “scenario analysis” to illustrate how a repricing of risks could “lead to a rise in credit spreads and a fall in capital market and housing prices, derailing the economic recovery and undermining financial stability.”

This week the IMF has gone a step further, courting the mainstream financial media to publicise its warning about the dangers of historically low volatility and related short volatility strategies.

As The FT reports, The International Monetary Fund has warned that the increasing use of exotic financial products tied to equity volatility by investors such as pension funds is creating unknown risks that could result in a severe shock to financial markets. In an interview with the Financial Times Tobias Adrian, director of the Monetary and Capital Markets Department of the IMF, said an increasing appetite for yield was driving investors to look for ways to boost income through complex instruments.

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

Here Is The IMF’s Global Financial Crash Scenario

October 22, 2017

Here Is The IMF’s Global Financial Crash Scenario

Hidden almost all the way in the end of the first chapter of the IMF’s latest Financial Stability Report, is a surprisingly candid discussion on the topic of whether “Rising Medium-Term Vulnerabilities Could Derail the Global Recovery”, which is a politically correct way of saying is the financial system on the verge of crashing.

In the section also called “Global Financial Dislocation Scenario” because “crash” sounds just a little too pedestrian, the IMF uses a DSGE model to project the current global financial sitution, and ominously admits that “concerns about a continuing buildup in debt loads and overstretched asset valuations could have global economic repercussions” and – in modeling out the next crash, pardon “dislocation” – the IMF conducts a “scenario analysis” to illustrate how a repricing of risks could “lead to a rise in credit spreads and a fall in capital market and housing prices, derailing the economic recovery and undermining financial stability.”

* * *

From the IMF’s Financial Statbility Report:

“Could Rising Medium-Term Vulnerabilities Derail the Global Recovery?”

This section illustrates how shocks to individual credit and financial markets well within historical norms can propagate and lead to larger global impacts because of knock-on effects, a dearth of policy buffers, and extreme starting points in debt levels and asset valuations. A sudden uncoiling of compressed risk premiums, declines in asset prices, and rises in volatility would lead to a global financial downturn. With monetary policy in several advanced economies at or close to the effective lower bound, the economic consequences would be magnified by the limited scope for monetary stimulus. Indeed, monetary policy normalization would be stalled in its tracks and reversed in some cases.

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

Looming Catastrophe Hanging Over Our Heads

October 18, 2017

Looming Catastrophe Hanging Over Our Heads

Former Assistant Treasury Secretary in the Reagan Administration, Dr. Paul Craig Roberts, says the record highs you see in the stock markets are based on “phony profits” that come from global central banks “propping up” the financial system. Roberts says, “Any of these central banks are really only there for a handful of big banks. That’s all they are concerned with. All the Federal Reserve has been concerned with for the last decade is the welfare of a handful of mega banks. Of course, the banks are too large. They should have never been allowed to get that large. When you have a bank too big to fail, then your policy has failed. You’ve allowed too much concentration. Where is anti-trust? Where is the Sherman Act? Everything that was legislated in the past to prevent the kind of looming catastrophe that is hanging over our heads, this looming catastrophe is produced by central banks. They are perpetuating it because they don’t know how to get out of it.”

The International Monetary Fund (IMF) has just warned on the profitability of nine huge global banks. Some say they equal nine possible Lehman Brothers, which was the financial institution that started the 2008 meltdown. Is the IMF terrified of the slightest correction in the markets? Dr. Roberts says, “I think so, yes, because it’s not based on reality. It’s based on massive liquidity. So, it’s full of all kinds of dangers.”

The biggest danger to Dr. Roberts, who has a PhD in economics, is the U.S. dollar. Dr. Roberts contends, “It seems to me that the only thing that would cause the Federal Reserve to stop the liquidity would be if the U.S. dollar fell under attack.

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

This Is What The Death Of A Nation Looks Like: Venezuela Prepares For 2,300% Hyperinflation

October 10, 2017

This Is What The Death Of A Nation Looks Like: Venezuela Prepares For 2,300% Hyperinflation

Back in January 2016, we showed what the collapse of Venezuela looks like, when in addition to charting Venezuela’s imploding currency (which back then was trading at a positive expensive 941 bolivars to the dollar), we presented what at the time was the IMF’s latest Venezuela inflation forecast, which stunned us as it surged from 275% in the just concluded 2015 to a whopping 720% at the end of 2016.

Fast forward nearly two years until today, when the IMF released its latest estimate of what it believes will happen to Venezuela’s economy in the coming year and a half. What is striking, besides the fact that Venezuela has somehow still managed to avoid bankruptcy, is that the IMF now expects Venezuela’s hyperinflation to reach a staggering 2,349% in 2018, after rising by “only” 626% this year, the highest estimate for any country tracked by the IMF. While the South American country stopped reporting economic data in 2015, the IMF estimates that last year inflation clocked in around 254%, a number which is set to soar in the coming years for obvious reasons.

At the same time as residents scramble to find alternative currencies to the local paper which will lost all of its purchasing power over the next year, the IMF predicts the “intensification of the political crisis in Venezuela” will lead to a further decrease in economic output. As a result, GDP is expected to shrink 6% in 2018, after dropping an estimated 12% in 2017.

And, as oil production declines and uncertainty increases, unemployment is forecast to increase to about 30% in 2018, also the highest and followed by South Africa’s 28% and Greece’s 21% .

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

Three Scenarios for the Global Economy

October 10, 2017

Three Scenarios for the Global Economy

The International Monetary Fund, which in recent years had characterized global growth as the “new mediocre,” recently upgraded its World Economic Outlook. But is the IMF right to think that the recent growth spurt will continue over the next few years, or is a temporary cyclical upswing about to be subdued by new tail risks?

NEW YORK – For the last few years, the global economy has been oscillating between periods of acceleration (when growth is positive and strengthening) and periods of deceleration (when growth is positive but weakening). After over a year of acceleration, is the world headed toward another slowdown, or will the recovery persist?

The current upswing in growth and equity markets has been going strong since the summer of 2016. Despite a brief hiccup after the Brexit vote, the acceleration endured not just Donald Trump’s election as US president, but also the heightening policy uncertainty and geopolitical chaos that he has generated. In response to this apparent resilience, the International Monetary Fund, which in recent years had characterized global growth as the “new mediocre,” recently upgraded its World Economic Outlook.

Will the recent growth spurt continue over the next few years? Or is the world experiencing a temporary cyclical upswing that will soon be subdued by new tail risks, like those that have triggered other slowdowns in recent years? It is enough to recall the summer of 2015 and early 2016, when investor fears of a Chinese hard landing, an excessively fast exit from zero policy rates by the US Federal Reserve, a stall in US GDP growth, and low oil prices conspired to undercut growth.

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

Dutch Central Bank Warns Of Market Calm Before The Storm:

October 9, 2017

Dutch Central Bank Warns Of Market Calm Before The Storm:

With one foot out of the door of Germany’s finance ministry, the former head of the German economy, Wolfgang Schäuble, 75, delivered a fire and brimstone warning over the weekend, telling the FT in an interview that there was a danger of “new bubbles” forming due to the trillions of dollars that central banks have pumped into markets. Schäuble also warned of risks to stability in the eurozone, particularly those posed by bank balance sheets burdened by the post-crisis legacy of non-performing loans, something we warned about since 2012, and an issue which remains largely unresolved.

Taking a broad swipe at the current financial regime – which he helped design – Schauble warned that the world was in danger of “encouraging new bubbles to form”.

“Economists all over the world are concerned about the increased risks arising from the accumulation of more and more liquidity and the growth of public and private debt. I myself am concerned about this, too,” he said echoing the concern voiced just one day earlier by IMF head Christine Lagarde, who said the world was enjoying its best growth spurt since the start of the decade, but warned of “threats on the horizon” from “high levels of debt in many countries to rapid credit expansion in China, to excessive risk-taking in financial markets”.

And while Schauble’s dramatic warning was not surprising – prominent economists have a habit of telling the truth once their tenure is over, and once they start selling books warning about all the consequences of policies they helped adopt – one day later a more surprising, and just as urgent warning was delivered by the Dutch central bank, DNB, which on Monday said that ultra-loose monetary policy in the euro zone has run its course, and excessive risks seem to be building up in financial markets making the financial sector vulnerable to a sudden correction.

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

Kyle Bass Sounds Off On “Worthless” Puerto Rican Debt, The Crypto “Gold Rush”, And Guns

October 8, 2017

Kyle Bass Sounds Off On “Worthless” Puerto Rican Debt, The Crypto “Gold Rush”, And Guns

With the dollar’s recent post-Fed bout of appreciation providing some much-needed relief for Haymarket Capital’s P&L, its founder Kyle Bass sat for an interview on Friday with Bloomberg’s Erik Schatzker. During the 20 minute discussion, Bass expounded on the importance of holding gold, his cautiously optimistic view on digital currencies, the misguided notion that holders of Puerto Rican debt will someday be made whole – oh, and Bass’s next big call: Long Greece – particularly the stocks and debt of Greek banks.

A few weeks ago, Bloomberg view published a Bass-penned editorial in which the hedge fund founder and CIO called on the IMF to stop bullying Greece – publicizing the fact that he is now effectively long Greece. Greek government bonds have performed reasonably well so far this year: They’re up about 16%.

And if Bass is right, they could have another 20% to 30% over the next 18 months if the IMF abandons its insistence on austerity and acknowledges that debt relief will need to be part of the long-term alleviation of debt. Bass added that, in the near future, voters will elect a more business-friendly government that will help reestablish the country’s creditworthiness, much like the government of Mauricio Macri did for Argentina.

I think you also have an interesting political situation in Greece where I think there’s going to be a handoff from the current Syriza government to kind of a more slightly-center-right but very economically independent new leadership in the next, call it, 18 months.

And so, I think you asked why now? And I think you’re starting to see green shoots. You’re starting to see the banks do the right things finally in Greece and you are about to have new leadership.

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

IMF Head Foresees the End of Banking and the Triumph of Cryptocurrency

October 2, 2017

IMF Head Foresees the End of Banking and the Triumph of Cryptocurrency

In a remarkably frank talk at a Bank of England conference, the Managing Director of the International Monetary Fund has speculated that Bitcoin and cryptocurrency have as much of a future as the Internet itself. It could displace central banks, conventional banking, and challenge the monopoly of national monies.

Christine Lagarde–a Paris native who has held her position at the IMF since 2011–says the only substantial problems with existing cryptocurrency are fixable over time.

In the long run, the technology itself can replace national monies, conventional financial intermediation, and even “puts a question mark on the fractional banking model we know today.”

In a lecture that chastised her colleagues for failing to embrace the future, she warned that “Not so long ago, some experts argued that personal computers would never be adopted, and that tablets would only be used as expensive coffee trays. So I think it may not be wise to dismiss virtual currencies.”

Here are the relevant parts of her paper:

Let us start with virtual currencies. To be clear, this is not about digital payments in existing currencies—through Paypal and other “e-money” providers such as Alipay in China, or M-Pesa in Kenya.

Virtual currencies are in a different category, because they provide their own unit of account and payment systems. These systems allow for peer-to-peer transactions without central clearinghouses, without central banks.

For now, virtual currencies such as Bitcoin pose little or no challenge to the existing order of fiat currencies and central banks. Why? Because they are too volatile, too risky, too energy intensive, and because the underlying technologies are not yet scalable. Many are too opaque for regulators; and some have been hacked.

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

The New World Order Will Begin With Germany And China

July 13, 2017

The New World Order Will Begin With Germany And China

In numerous articles over the years I have outlined in acute detail the agenda for a future one-world economic and governmental system led primarily by banking elites and globalists; an agenda they sometimes refer to as the “New World Order.” The term has gained such public exposure and notoriety recently that the globalists have fallen back to using different terminology. Some of them, like the International Monetary Fund’s Christine Lagarde, refer to it as the “global economic reset.” Others call it the “new multilateralism.” Still others refer to it as the “end of the unipolar order,” referring to the slow death of the U.S. economy as the central pillar of the global economy.

Whatever label they decide to use, all of them signal a full spectrum destabilization of the “old world” financial and geopolitical system and the ascendance of a tightly controlled one world edifice dominated openly by globalist hubs like the IMF and the BIS.

Too many people, even in the liberty movement, tend to examine only the veneer of this agenda. Some have deluded themselves into thinking the U.S. and the dollar are actually the core of the NWO and are therefore indispensable to the globalists. As I have shown time and time again, the Federal Reserve is now on a fast track to complete its sabotage of the U.S. economy; they would not be instigating instability and crisis to deflate the massive fiscal bubbles they have created unless America was at least partially expendable.

Some believe the NWO is a purely “western” construct and that eastern nations are defending themselves against an encroaching globalist empire. I have also shown that this is nonsense, and that eastern nations work closely with the same exact globalists they are supposedly at war with. This includes Russia’s Vladimir Putin, a figure often ignorantly praised by select liberty activists.

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

IMF Rings The Alarm On Canada’s Economy

July 13, 2017

IMF Rings The Alarm On Canada’s Economy

Shortly after yesterday’s rate hike by the Bank of Canada, its first since 2010, we warned that as rates in Canada begin to rise, the local economy which has seen a striking decline in hourly earnings in the past year, which remains greatly reliant on a vibrant construction sector, and where households are the most levered on record, if there is anything that can burst the local housing bubble, it is tighter monetary conditions. And a bubble it is, as the chart below clearly demonstrates… one just waiting for the pin, which as we suggested yesterday in “”Canada Is In Serious Trouble” Again, And This Time It’s For Real“, may have finally been provided thanks to the Bank of Canada itself.

Now, one day after our warning, the IMF has doubled down and on Thursday issued its latest consultation report, in which it said that while Canada’s economy has regained some momentum, it warned that business investment remains weak, non-energy exports have underperformed, housing imbalances have increased and uncertainty surrounding trade negotiations with the United States could hurt the recovery.

The report – which concerningly was written even before the BOC hiked rates by 0.25% – also said the Bank of Canada’s current monetary policy stance is appropriate, and it cautioned against tightening.

“While the output gap has started to close, monetary policy should stay accommodative until signs of durable growth and higher inflation emerge,” the IMF said, adding that rate hikes should be “approached cautiously”.

Directors noted that Canada’s financial sector is well capitalized and has strong profitability, but that there are rising vulnerabilities in the housing sector… Directors agreed that monetary policy should stay accommodative and be gradually tightened as signs of durable growth and
inflation pressures emerge.

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

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