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Poloz to Queen’s University debt slaves: don’t worry about the “poverty effect”
“These are exciting times,” Poloz told a large crowd at Queen’s University . “Students here will shape the future. I cannot wait to see how it turns out.”
Afterwards, during a press conference with local and student media, Poloz brushed aside speculation about a possible “poverty effect” caused by rising interest rates.
Poloz cited a strengthening Canadian economy and downplayed suggestions that central bank rate-tightening cycles—which crashed global stock markets in the early and mid-2000s—would do so again.
Yet while the extent of a “poverty effect” in the overall economy may be open for debate, there are growing signs that central bank actions are impoverishing Canadian youth.
Consider:
Trickle down central banking
During the 1980s, economists derided US President Ronald Reagan’s policies—which cut taxes in the hope that they would spur economic growth—as “trickle down economics.”
Yet the Canadian government has adopted similar tactics.
The Bank of Canada’s “wealth effect” policies are intended to drive up asset prices in the hope that richer consumers will spend more, thus boosting the overall economy.
For example, if a Queen’s University economics professor sees his stock portfolio double, he might then buy extra lattés at the campus Starbucks, thus creating more jobs.
Sadly, the wealth effect hasn’t been working for the country’s youth— 44% of the 4.5 million Canadians aged between 15 and 24 are out of work.
Worse, trickle down central banking requires constant borrowing, at a pace faster than GDP growth.
As Renaud Brossard , executive director of Generation Screwed noted recently, such policies stick Canadian youth with nearly all of the country’s debts.
…click on the above link to read the rest of the article…
Richard Sylla: 70% to 80% Chance of Another Global Financial Crisis
Richard Sylla: 70% to 80% Chance of Another Global Financial Crisis
When Janet Yellen, Chairman of the US Federal Reserve, said in June that she does not expect another financial crisis in our lifetime, eyebrows were raised.
None more so than Richard Sylla’s.
Sylla, a professor emeritus at the Stern School of Business and co-author with Sydney Homer of the magisterial A History of Interest Rates, has studied past business cycles. He is thus able to put today’s events in a broader context.
“A lot of the same things are going on right now as before the 2008 crisis,” said Sylla, who puts the probability of a repeat, in our lifetimes, at between 70% and 80%.
“People figure that central banks avoided a Great Depression last time and can do it again,” said Sylla. “So they are not worried.”
The most important price in the economy
Sylla’s work is particularly important because interest rates, which have a direct influence on all economic activity, are simply the most important prices in the economy.
For example, the average American who bought a $250,000 home and financed it for 30 years at 3.83%, would pay just over $175,000 interest during that time. That’s almost as much as the cost of the house itself.
Interest rate levels also affect the real prices of cars, as well as all other consumer, business and government purchases – hence the ever-present temptation among policy-makers to keep rates low.
US Treasuries: yields at least 8% in a free market?
History provides a hint of the scale of the Fed’s current interventions, which could be depressing interest rates by at least 5.0 percentage points across the yield curve. The result is the transfer of trillions of dollars a year from American savers to borrowers.
…click on the above link to read the rest of the article…
Russia and China Strengthen Their Alliance, Weakening the US Dollar in the Process
Month after month, year after year, the mighty King Dollar is slowly being weakened, its monopolistic grip as the fiat reserve currency of the world steadily lessening. To many, this reality passes them by, as they are blissfully ignorant to the facts, living their lives without knowing the true ramifications that this will have on their lives.
People have simply taken for granted the reality that they live in and the power that comes along with having the unique status of “reserve currency of the world”. This has granted the United States the ability to expand its empire and military might, despite the fact that it is utterly bankrupt, with its debt levels just recently exceeding the stunning $20 trillion mark. This is a debt that will never be repaid.
Yet, it has not just been the United States that has benefited. Their closest allies have also experienced a trickling down effect and benefited from the close relationships they have formed with their ally and chief trading partner.
Indeed, it has been a good ride, but like all rides, eventually they must come to an end. This is exactly where we stand now. The ride is slowing down and not because the passengers want to get off, but because those waiting in line are demanding their turn.
China and Russia have been increasingly growing closer and closer as the years go on. They have been forced into this uncanny partnership due to the numerous economic sanctions placed on Russia and the ratcheting rhetoric used against China.
…click on the above link to read the rest of the article…
Bank of Canada Shuts Out Free Market Economists from Key Policy Conference – Peter Diekmeyer
Bank of Canada Shuts Out Free Market Economists from Key Policy Conference – Peter Diekmeyer
Next week’s Bank of Canada policy conference appears set to deliver standard talking points. Not a single free market economist has been invited and a BOC spokesperson confirmed that the alternative-financial press is also being shut out.
The BOC event, titled Monetary Policy Framework Issues: Toward the 2021 Inflation Target Renewal , takes place during a critical time for Canada’s central bank.
Bank of Canada economists emerged from the 2008 financial crisis red-faced, after having failed to predict the event in advance, despite the clear warning signs and having some of the country’s most respected practitioners on staff.
The BOC then had to bail out Canada’s big five banks, whose solvency the monetary authority is charged with overseeing.
Questions regarding Poloz’s “trickle down”economics
Things do not appear to have improved much under the reign of Stephen Poloz, its current Governor.
The Bank of Canada ranks last among the G-7 central banks in terms of its gold holdings, this during a time of record high Canadian household debts and one of the planet’s biggest housing bubbles.
There are also increasing questions regarding Mr. Poloz’s “trickle down” economics strategy, which consists of leveraging “considerable economic stimulus” to boost asset prices, in the hope that a resulting “wealth effect” will trickle down to the poor and the young.
Government-financed academics, officials and a government financed NGO
A quick look at the presenters at the upcoming event reveals the usual “broad range of opinions” that Canada’s central bank consults.
The 20 panelists, almost all of whom are financed or regulated by government, include:
- Four Canadian government employees
- Eight academics from Canadian universities, which draw the vast majority of their funds from government.
- One presenter from a Canadian think tank that received a reported $30 million in government money
- One representative representing Canada’s big banks, which were bailed out by governments during the last financial crisis.
…click on the above link to read the rest of the article…
A 1970s self-help guru’s hint why investors may be duped (again)
America’s top forecasters missed the 2008 market crash, during which stock investors lost half their money. Now with stocks approaching bubble territory it looks they are again ignoring warnings signs. What gives?
The biggest red flag is the S&P 500 index, which groups 500 of America’s largest public companies and is trading near record highs. This despite a sluggish US economy driven by record government spending, borrowing and money printing.
In short, conditions look exactly like those that prevailed just before the 2008 financial crisis, when equities investors lost half their money in a matter of months.
So why haven’t the experts, many of whom are near-genius-level, ivy-league professionals, provided clear warnings about the risks in the system?
The S&P 500 index
Wisdom from a 1970s self-help guru?
One clue might come from consulting creative thinkers from outside the economics profession, like er…Robert Ringer?
Yes that Robert Ringer. The self-help guru, who in his 1970s best-seller Looking out for #1, outlined a useful template to use when assessing human behavior.
“All people act in their own interest all the time,” writes Ringer, who believes that people re-define self-interested actions to make themselves look virtuous.
What Ringer calls the “definition game” enables politicians, like recently-retired ex-Conservative Party leader Rona Ambrose who took home nearly $5 million in salaries and pension benefits for just 13 years work, to describe herself as a “public servant.”
Ringer’s “human nature group” theory in many ways explains modern human action better than Hobbes, Nietzsche and even Ayn Rand, yet appears dark when applied to individuals – even to politicians. However it has a strong basis in academic theory.
…click on the above link to read the rest of the article…
How Solid are Canada’s Big Banks?
The World Economic Forum consistently ranks Canada’s banks among the world’s safest. Competent regulators have overseen stress tests, tightened lending standards and delinquency rates are low. Demographics are good and the country’s diversified economy is backed by a treasure of oil, wood, gold and other natural resources.
So the experts say.
Institutional investors, relying on the work of Jeremy Rudin, Canada’s chief bank regulator, agree. In fact, Canadian financials accounted for 35.5% of the market capitalization of the benchmark exchange (NBF February).
However this façade hides major uncertainties. Key concerns stand out, which if unaddressed, could spark solvency and liquidity issues in one or more of Canada’s Big Six banks.
The fragilities can be seen in an IMF report, which calculated that Canada’s financial sector accounted for a stunning 500% of GDP in 2012. Today, the assets of the Big Six banks alone are more than double the size of the country’s economy.
Each (RBC, CIBC, Scotiabank, BMO, TD and National Bank) have been designated “systemically important,” which in turn, due to sheer size and interconnectedness, suggests that they are almost certainly “too big to fail.” That means the collapse of any one Big Bank would threaten to trigger systemic implosion.
More ominously, if Canada’s financial system, arguably the world’s best, is riddled with pores, what does that say about the US, the UK, and Japan? Let alone Italy and Spain?
Yet signs of fragility are everywhere. Consider:
Complacency following “secret” $114 billion bailout
A quick review of key metrics suggests Canada’s banking sector, which, on the surface, having largely escaped the 2008 financial crisis, has thus learned little from it.
As David Macdonald demonstrated in a paper for the Canadian Center for Policy Alternatives, Canada’s Big Banks benefited from nearly $114 billion in cash, liquidity, and other bailout help from both local and US sources following the financial crisis.
…click on the above link to read the rest of the article…
Hyperinflation Defined, Explained, and Proven: Part II – Jeff Nielson
Hyperinflation Defined, Explained, and Proven: Part II – Jeff Nielson
Part I began the somewhat ambitious mission described in the title: providing readers with the true definition of the term “hyperinflation”, in both economic and mathematical terms. This was done through first defining the term “inflation” itself. It was then explained how the dynamics of inflation/hyperinflation operate, through the use of a simple allegory. Finally, readers were provided with a real-life illustration: the hyperinflation of the U.S. money supply .
Part II continues this mission by explaining why the current economic context makes a full-blown, monetary episode of hyperinflation inevitable, meaning the collapse (to zero) in the exchange rate of our fiat currencies – at least those of the Corrupt West. The starting point here is obvious: “competitive devaluation” .
Competitive devaluation is the official (and permanent) monetary policy of all the regimes of the Corrupt West. Let me restate this, so that the true insanity and criminality of this policy is explicit. All of our governments are racing to see which can drive down the value of its currency the fastest, i.e. which can “create inflation” the fastest – since lowering the exchange rate and creating inflation are two sides of the same coin.
Regular readers already know what inflation really represents: central bankers stealing our wealth through (deliberately) diluting the value of our currencies. We already have the written confession from the Dean of these inflation-thieves.
In the absence of the gold standard, there is no way to protect savings from confiscation [i.e. theft]through inflation.
– Alan Greenspan, 1966
Our governments are racing to see which can steal our wealth the fastest, through the monetary crimes of the central banks which rule above them . When will it end? When will our governments stopthis race to steal our wealth?
…click on the above link to read the rest of the article…
Big Banks Caught Using Credit Default Swaps To Destroy Nations
Big Banks Caught Using Credit Default Swaps To Destroy Nations
At the beginning of 2010, readers were presented with what was (at the time) merely a theory. The Big Bank crime syndicate was engaged in the serial manipulation of credit default swaps, in order to (among other things) destroy the economies of entire nations. It’s one of the reasons these “financial weapons of mass destruction” ( Warren Buffett ) were illegal in the U.S. for roughly 100 years, banned under anti-gambling statutes.
The theory was supported by a combination of compelling empirical evidence and logical deduction (i.e. “circumstantial evidence”) – roughly the same evidentiary basis by which we obtain most of our criminal convictions in our courts of law. The difference here is that with our governments having abandoned the Rule of Law, there was no one ready or willing to adjudicate over such evidence.
Before moving to the new evidence of an open conspiracy by the Big Banks to manipulate this market, it is necessary to review this older evidence. The chronology begins after the Crash of ’08, and takes the form of a comparison of two nations and their economies: Greece and the U.S.
Both nations were clearly hopelessly insolvent. Both nations’ insolvency came largely through absurd levels of military over-spending. The main difference is that one nation – the U.S. – was even more insolvent than the other. It simply pretended (and still pretends) to be “solvent” through enormous and absurdly transparent accounting fraud, which would be instantly prosecuted if attempted by any U.S. corporation (other than a Big Bank ).
Yet despite these two similar economies, there was nothing similar about their interest rates. The benchmark U.S. interest rate was permanently frozen at an ultra-fraudulent 0%. This meant paying no interest on loans to the U.S. government, despite the enormous risk of lending money to history’s most-indebted nation.
…click on the above link to read the rest of the article…
