The signs of deflation are now flashing all over the globe. In our estimation, the possibility of an associated financial crisis is now dangerously high over the next few months.
As we’ve been saying for a while, our preferred model for how things are going to unfold follows the Ka-Poom! Theory as put out by Erik Janszen of iTulip.com.
That theory states that this epic debt bubble will ultimately burst first by deflation (the “Ka!”) before then exploding (the “Poom!”) in hyperinflation due to additional massive money printing efforts by frightened global central bankers acting in unison.
First an inwards collapse, then an outwards explosion. Ka-Poom!
We’ve been tracking the deflationary impulse for a while, and declared deflation the winner back in July of this year. Continue reading
One way or another, rates must go up.
The central bank is facing a communications problem.
The effectiveness of the Federal Reserve’s communication strategy is clearly questionable when the outcome of a Federal Open Market Committee meeting is considered a coin toss among economists who closely follow monetary policy.
What’s missing from the central bank’s communication strategy?
Monthly Investment Outlook from Bill Gross
I’m not what you would call a “prayerful” type of guy. Even at 30,000 feet, when the air gets rough, I never invoke the “God” word, settling instead for promising myself that if I ever get back to terra firma, I will never fly again, which I promptly forget days or even hours later. It’s not that I’m a non-believer in prayer’s ultimate destination, but more of a cynical take on why the Lord would hand out party favors to everyone that asked, or to those that asked most intently.
Funny, too I think, about how I learned two different versions of the Lord’s Prayer: one – the Protestant litany – spoke to “forgiving our debts as we forgive our debtors”; the other – maybe a more traditional Catholic influenced version – substituted “forgive our trespasses as we forgive those who trespass against us.” The differences never much bothered me as I prayed less and sinned more into my teenage years, but later I got to thinking about it as I entered the bond market and began to contemplate the odds of paying and being paid, or trespassing and being trespassed against with other people’s money. Given a chance, I thought I would infinitely prefer forgiving a trespasser as opposed to a debtor. Continue reading
Please see the website source for the video.
While markets hone in on the Federal Reserve’s monetary policy hints, former Fed Chairman Alan Greenspan sees a bigger economic irritant—government spending.
On Wednesday, Greenspan decried a rise in entitlement costs, which he contended have pressured the U.S. economy.
AUSTIN, Texas (AP) — Forget Fort Knox or the Federal Reserve. Texas has decided to start keeping its gold holdings within in its own borders. But what makes sense politically in such a sovereignty-loving place is creating a logistical conundrum.
Texas is the only state that owns an actual stockpile of gold, according to public sector and financial industry experts – not just gold futures or investment positions, but approximately 5,600 gold bars worth around $650 million. The holdings, stored at a New York bank, for some harken back to century-old fears about the security of currency not backed by shiny bullion. Continue reading
(Reuters) – Federal Reserve Chair Janet Yellen on Wednesday said high equity valuations could pose potential dangers but that stability risks across the U.S. financial system remained in check.
“I would highlight that equity market valuations at this point generally are quite high,” Yellen said. “There are potential dangers there.”
Yellen’s view on the run-up in stocks was an answer to questions from International Monetary Fund Managing Director Christine Lagarde, who joined the Fed chief for the opening session of the “Finance and Society” conference here. Continue reading
Could negative interest rates create an existential crisis for money itself?
JPMorgan Chase recently sent a letter to some of its large depositors telling them it didn’t want their stinking money anymore. Well, not in those words. The bank coined a euphemism: Beginning on May 1, it said, it will charge certain customers a “balance sheet utilization fee” of 1 percent a year on deposits in excess of the money they need for their operations. That amounts to a negative interest rate on deposits. The targeted customers—mostly other financial institutions—are already snatching their money out of the bank. Which is exactly what Chief Executive Officer Jamie Dimon wants. The goal is to shed $100 billion in deposits, and he’s about 20 percent of the way there so far. Continue reading
There were other signs of traction. The Eurozone trade surplus with the rest of the world has been setting new records, powered by strong exports, particularly from Germany. This trend kicked off before the euro started tanking a year ago.So on Monday, ECB President Mario Draghi took the opportunity to slap himself and his colleagues on the back for their heroic and bold action, as these things are called, and offered an upbeat assessment of the Eurozone economy. He proclaimed “that growth is gaining momentum.” And he totally nailed it with three out of the four reasons he gave for that growth:
This is due to in particular the fall in oil prices, the gradual firming of external demand, easy financing conditions driven by our accommodative monetary policy, and the depreciation of the euro. Continue reading
(Reuters) – Russian President Vladimir Putin proposed on Friday creating a regional currency union with Belarus and Kazakhstan, Russia’s main partners in a union of ex-Soviet states facing growing economic challenges.
Putin made his proposal at a meeting with the Belarussian and Kazakh presidents, who did not respond in public but have been lukewarm about such proposals.
“I think it is a truly scary time,” Andy Redleaf, CEO of $4.2 billion hedge and mutual fund manager Whitebox Advisors, said in an internal memo Sunday night obtained by CNBC.com.
“We do not know exactly where all the credit creation of this cycle has gone. Certainly money sits idly as excess reserves, but just as certainly money that would not exist but for unconventional monetary policy has distorted prices and resource allocation,” Redleaf wrote.
Last month it was revealed that former federal reserve Chairman Alan Greenspan, the architect of U.S. monetary policy under four Presidents, is anticipating a significant market event as a result of the trillions of dollars that have been pumped into the system over the last several years. According to Greenspan, something big is coming.
His comments were shared by well known resource analyst Brien Lundin, who joined Greenspan for private discussions at last year’s New Orleans Investment Conference. In his latest interview Lundin further clarifies Greenspan’s private thoughts on current economic and monetary policy and sheds light on the former Fed Chairman’s suggestion that ‘something big is coming.‘ Continue reading
Lord Rothschild characterized the geopolitical situation in the world as the most dangerous since the end of WWII, warning investors about a forthcoming crisis.
“We are confronted by a geopolitical situation perhaps as dangerous as any we have faced since World War II: chaos and extremism in the Middle East, Russian aggression and expansion, and a weakened Europe threatened by horrendous unemployment, in no small measure caused by a failure to tackle structural reforms in many of the countries which form part of the European Union,” wrote Jacob Rothschild, a British investment banker and a member of the prominent Rothschild family, in an annual Strategic Report of RIT Capital Partners plc (RIT). Continue reading
A referendum that would force the Swiss central bank to hold a fifth of its assets in gold could rock foreign exchange markets, analysts have warned.
On the 30th November, voters in Switzerland will head to the polls to decide whether the Swiss National Bank (SNB) should boost its gold holdings and refrain from any further selling of Swiss gold.
The referendum, proposed by the ultra-conservative Swiss People’s party, will also require the bank to repatriate all Swiss gold holdings currently held outside of Switzerland if passed.
The ban on selling gold would go into effect immediately and the SNB would have five years to reach the 20 percent requirement. Continue reading
The following is an article published originally in German, translated in the best way Google can offer. Because this is fresh off the German press, don’t expect it to hit American news outlets until another week or so — and likely not on the major national outlets.
When the BIS speaks, markets listen. This is essentially a jaw dropper of an announcement. They realize that all the QE heroin injections are not working and that there is no way to financially turn the American economy around — it’s mathematically impossible. They also know that the US financial leadership knows. The day of reckoning is near and it’s not just the US that will be affected and, although it will suffer the worst, the entire world over is going to go through a change unheard of in its entire history.
(Für die Lesern, dass deutschen sind, klicken Sie bitte auf dem original Link.)
The Bank for International Settlements (BIS) is the current situation on the financial markets as worse than before the Lehman bankruptcy. The warning of the BIS could be the reason why the U.S. Federal Reserve decided to continue indefinitely to print money: Central banks have lost control of the debt-tide and give up.
The decision by the U.S. Federal Reserve to continue indefinitely to print money (here ) might have fallen on “orders from above”.
Apparently, the central banks dawns that it is tight.
The most powerful bank in the world, the Bank for International Settlements (BIS) has published a few days ago in its quarterly report for the possible end of the flood of money directly addressed – and at the same time described the situation on the debt markets as extremely critical. The “extraordinary measures by central banks” – aka the unrestrained printing – had awakened in the markets the illusion that the massive liquidity pumped into the market could solve the fundamental problems (more on the huge rise in debt – here ). Continue reading
Wednesday night’s panic in Tokyo, where the Nikkei dropped a stomach churning 7pc, kicking off a global chain-reaction that saw the FTSE fall 143.48 points, demonstrates just how difficult it is going to be for the world’s central banks to exit their loose money policies.
It’s not even as if Ben Bernanke, chairman of the Fed, said he was planning to exit; in fact, initially he said the reverse, in testimony to Congress. It was only in the Q&A, and in minutes to the last meeting of the Fed’s Open Markets Committee, that a clear bias emerged to slow the pace of asset purchases “in the next few meetings”, so long as the economic data were strong enough. Continue reading