11.28.23- Fed Rate Cuts Will Not Save The Economy
Market implied Fed Funds rate discount a string of cuts starting in January 2024 and culminating in a 4.492 percent in January 2025. These expectations are based on the perception that the Federal Reserve will achieve a soft landing and that inflation will drop rapidly. However, market participants who assume rate cuts will be bullish may be taking too much risk for the wrong reasons. Read More
High mortgage rates have effectively frozen the US housing market. And while lower rates could be on the horizon, Americans might have to wait awhile.
The average rate for a 30-year fixed-rate mortgage is over 7%, up from roughly 3% at the beginning of 2022. This has deterred prospective first-time homebuyers from taking the plunge and made existing homeowners reluctant to sell their homes and buy another — they'd rather stick with the super-low rates they already locked in. Read More
And next year we are likely to see the greatest money creation out of thin air in the entire history of the US. The Fed has to create ways to finance the record deficits by the creation of new money. Read More
11.24.23- People See Better Than Economists
We're no longer even sure what economists are since they clearly are not people who understand economics, so maybe not even people at all.
Can you believe the Treasury market is already unwinding its bets that the Fed is done fighting inflation, even as the Champaign is still bubbling in half-empty flutes left behind from everyone’s celebration of the Fed’s victory? Of all the odd things, the average consumer out there, who is not heavily invested in stocks and bonds, seems to believe inflation is actually kind of bad and getting worse. Read More
Remembrances of holidays past can enable us to appreciate the present all the more.
On Oct. 3, 1789, America’s new president, George Washington,
11.22.23- As Debt Skyrockets, So Does This
Physical gold: The opposite of debt
There are a few things that are now admitted even in the somewhat-mainstream. The U.S. federal government is indebted by over $33 trillion, and it matters. It not only matters, but gold stands to benefit from it. It must, or we wouldn’t be seeing these two mentioned together so often.
The metal has had a good week on what some attribute to fears of loose monetary policy. We know how the boom and bust goes. The moment the Federal Reserve shows any kinds of easing, we expect an avalanche of selling to crush the U.S. dollar’s purchasing power. Read More
This crybaby stuff is just funny. So let’s have a look.
What we can loosely call our spoiled-rotten Wall Street crybabies – hedge fund magicians, investment bankers, bond-fund gurus, and what not – that got big and fat off the Fed’s free money, are now whining and crying and fearmongering about the Fed’s QT.
For now, they’ve homed in on the Fed’s Overnight Reverse Repurchase agreements (ON RRPs) that were at $2.3 trillion this spring and are now down to $935 billion and will go to near $0, as QT is draining liquidity from the system. Read More
11.20.23- And Now, for Something Entirely Different: Leaving Blobtopia
“The vibe shift being witnessed is nothing more then a managerial class losing the mandate of heaven as they squander the inheritance of empire.” —Jim Sharp
A nation can only take so much corruption, crime, and unreality. ”We’re an empire now, and when we act, we create our own reality,” said Karl Rove, veteran blobster and advisor to George W. Bush, when he uttered those fateful words. Even political junkies forget the rest of what he said: Read More
The inflation battle is about to get weird and chaotic.
The fire alarm sounded, and everyone fled out the exits, practically trampling each other to death in order to save their lives. Then they all came running back into the flaming building, practically tripping over each other due to the thick the smoke in order to get in first. What on earth happened? Read More
Gold prices rally as weak jobless data cools expectations for more Fed interest rate hikes.
Gold prices rebounded strongly on Thursday following higher than expected US jobless claims data, which led markets to scale back expectations of further interest rate hikes by the Federal Reserve this year. Read More
11.16.23- Exposing Our Fed-Driven
David Stockman served for a short while as budget director during Ronald Reagan’s firstterm as president, but he soon resigned owing to Reagan’s refusal to cut government spending. He has since that time worked as a private investment adviser, at which difficult profession he has been highly successful, and he has written a number of books, among which the monumental Great Deformation (Public Affairs Press, 2013), is the most notable. The Great Money Bubble contains many vital lessons about money and macroeconomics, and in what follows I’ll discuss a few of these. But I’m not able to assess one part of the book. Read More
Financial Conditions loosen further: credit markets blow off the Fed to make sure “higher for longer” gets entrenched? That would be funny.
11.14.23- The Truth is Leaking Out
FedNow is Broke. So is Labor. Watch out for CPI.
The truth about the Fed’s errors isn’t exactly burning up the news yet, but it is slowly leaking out in the mainstream media. Some of it must have accidentally escaped because one multi-year major error was finally presented in stark terms in a hot headline about labor burnout today, though the publisher still didn’t hold the Fed accountable for its gross misunderstanding of labor. I’m not sure the publisher even understood the huge significance of what they reported. Read More
11.13.23- Is the FedNow Broke?
It sounds like the whole Federal Reserve System is creaking and breaking.
Recently several major banks were unable for days to process hundreds of thousands of payments. The explanation by the banks given in one report in today’s news headlines was that
Talk of a “Cyber 9/11” has been circulating for years. With the next presidential election twelve months away now, some folks are predicting that a major cyber event will happen before then, throwing a monkey wrench into the 2024 election process.
What the heck is Cyber 9/11?
What does Cyber 9/11 mean? Is there a real risk? What should we be preparing for? Read More
11.10.23- Outsized Yield Swings Defy Bond Traders Bets For Calm
Treasuries tumbled to undo part of this week’s sharp rally, and once more the longer end of the curve was a key pain point.
Federal Reserve Chairman Jerome Powell’s pushback against the idea that interest rate hikes are done undoubtedly played a role, the spike in yields was the largest for 20- and 30-year notes. Read More
11.09.23- U.S. Caught in Death Trap
Imagine a fellow…
This is a wastrel sunk impossibly in debt — credit card debt.
Spiraling interest payments begin to swamp him.
He must take on an additional credit card in order to satisfy interest payments on the original. Read More
Update (9:18am ET). As is usually the case, Powell's prepared remarks which were just released, did not comment on the outlook for Fed policy or economy so soon after the FOMC meeting. Instead, the Fed chair focused on the Fed's forecasting voodoo and said the central bank must be willing to think beyond the complex mathematical simulations it traditionally uses to forecast the economy. Read More
People right now are wondering what the big upsurge in stocks last week means. Is the market going back into a bull rally? I gave my brief take in one section of my “Deeper Dive” this weekend, and I’m going to share that section with everyone, just as I wrote it because, as you can see in the headlines below (available to everyone on Mondays), trying to figure out what last week’s big turn in stocks means is on a lot of people’s minds. (My response essentially: “Not much; it will fade quickly.”) Read More
11.06.23- The Fed Has a Commitment Problem
This past Tuesday, I offered the following forecast of what would happen at the FOMC meeting this week:
11.04.23- Once Upon a Time in Flagstaff
During the great bond bull market from September 1981 to July 2020 the yield on the 10-Year Treasury note fell from 15.32 percent to 0.62 percent. Since then, the yield has spiked up to where it currently sits at about 4.66 percent.
The rapid interest rate flux has been unpleasant for bankers, borrowers, and businesses. By our estimation the unpleasantness has only just begun. Read More
We’re enduring a stagflationary crisis – there’s no way around it.
It doesn’t matter how much oil Joe Biden dumps on the market from the Strategic Reserves.
It doesn’t matter how many jobs he is able to temporarily buy with $8 trillion-plus deficit spending. Read More
The FOMC opted to leave the Fed Funds rate unchanged yesterday with the upper bound at 5.50%. This was expected, so attention turned to parsing the statement and Jerome Powell’s prepared remarks to divine any shifts in the Fed’s reaction function. The economy expanded at a ”strong” pace in the third quarter, rather than the obviously more mediocre “solid” pace that it was previously travelling at. Hawkish!
But lo, we are concurrently warned not to put too much emphasis on the September dot plot, which implies another rate hike. A new set of dots is due next month and the old ones lose reliability with age. Or so Powell tells us. Read More
11.01.23- The Zombies are Dying
It's Halloween madness in the markets.
Since QT started, stocks have been on their own, after having been babied by the Fed since 2008. And it’s not working out.
There are some things happening in this inflationary world that contradict well-established previous wisdoms, including that stocks are a hedge against inflation. Turns out, since QE started in 2008, all prior wisdoms had to be thrown out the window, and the new wisdoms are all about QE and now QT: QE makes stocks go up, and QT makes stocks go down, no matter what inflation and the real economy do. Read More
10.30.23- Death to Savers
The Federal Reserve artificially suppressed interest rates from roughly 2008 to 2022. It did so by creating $8 trillion of credit out of thin air to buy Treasuries and mortgage-backed securities.
This pushed stock, bond, and real estate markets well beyond what the underlying economy could support. Falsified interest rates also birthed wild objects of speculation.
Speculative manias always gain momentum through the expansion of credit. A look back at past manias tells a familiar story. Read More
10.28.23- Cognitive Dissonance Hammers my Head
Do you want Fedworld or Realworld?
In the real world today, the Dow is negative for the year, with a third of the Dow down double-digits. At one point it was down over 400 points today. The S&P retired the day fully in correction while the NASDAQ, as I noted in the paid portion of yesterday’s “Deeper Dive” entered the correction zone Wednesday and crossed below its 200-day moving average on Thursday. It attempted to rise today on the positive energy of Amazon, which reported huge earnings, but it lost a good part of that rise by the end of the day. Unfortunately for it, its valiant effort was not enough to prove its bearish cross on Thursday was just a head-fake. So, it stuck the landing down in those nether regions, and stocks closed the week with a heavy thud. That’s Realworld. Read More
For the first time in his long and tempest-ful tenure at the CEO of JPMorgan, Jamie Dimon has decided the time is right to dump 1 million shares in the mega-bank.
According to a regulatory filing Friday, Dimon and his family will dispose of 1 million of the bank's shares, which amounts to around a $140 million haul, and the CEO's "first such stock sale during his tenure at the company."Read More
US fiscal policy is increasingly infringing upon the Federal Reserve’s independence, heightening already elevated secular inflation risks and condemning the dollar to an even deeper debasement in its value...
It was good while it lasted.
But the modern era of monetary policy independence is drawing to a close, with central banks reverting to their usual position of subservience to their fiscal overseers. Read More
Last week, Federal Reserve Chairman Jerome Powell delivered a speech at the Economic Club of New York luncheon. In his podcast, Peter Schiff broke down some of the Fed chair’s comments and concluded that Powell is not qualified to be a member of any economic club.
Peter opened the discussion by saying Powell is not the person to bring in if you want answers about the economy. Read More
Gold nears $2,000 for the third time in three years
It’s not the most accurate thing to say, perhaps, from a technical standpoint, as gold has seesawed across that level quite a bit over the last three years. But in that time, there were three spectacles that brought gold to $2,000 from various sideways trades. Those were the lockdowns, the Russia-Ukraine war and conflict between Israel and Hamas. Read More
This is not about whether there is such a thing as a literal social contract. The phrase has always been a metaphor, and an imprecise one since it was first invoked by Enlightenment-era thinkers trying to sort through a rationale for collective practice of some sort.
It’s easy enough to regard the social contact not as explicit but implied, evolved and organic to the public mind. At the most intuitive level, we can think of it as a widely shared understanding of mutual obligation, a tie that binds, and also the exchange relationship between society and state. Read More
10.21.23- Restrictive Yields Will Be The Fed’s Waterloo
Restrictive monetary conditions, from higher yields and tighter lending conditions, are the Fed’s “Waterloo.”
If you don’t remember, the “Battle of Waterloo” was fought on June 18th, 1815. The battle was a catastrophic defeat for the Napoleonic forces and marked the end of the Napoleonic Wars. Before that defeat, Napolean had a successful campaign of waging war in Europe. Read More
Fed Chair Jerome Powell made the point clear for stock investors today: the Fed is in the fight to stay … taking interest as high as it takes for as long as it takes, and we aren’t anywhere near there yet. In response, the long brain-dead, zombie stock market tumbled another 250 points on the Dow today, but not until it first did its best to exhibit its zombie brain to denying Powell’s pungently clear statements with an attempted rise. Treasury yields also rose again in response with the 10YR tickling the underside of 5%. Read More
10.19.23- Zombie Alert!
Today we run a warning flag up our flagpole…
For we have detected “zombies.” Zombies?
Mr. Robert Burrows of BondVigilantes.com:
10.18.23- Too Much Debt!
The Federal Reserve thinks economic growth comes with lots of debt and low interest rates. The Fed succeeded in that banks, consumers and The Federal government went wild in borrowing money, but now a hangover is happening as inflation surged and interest rates rose.
First, debt laden banks
Paper losses on the most opaque part of US banks’ bond portfolios are now close to $400bn — an all-time high, and 10 per cent above the peak at the start of the year that caused the collapse of Silicon Valley Bank. Read More
10.17.23- Buckle Up, Things Are About to Get MESSY
The yield on the all-important 10-Year U.S. Treasury is spiking again. As I write this, it’s about to take out its former highs.
There are no shortage of reasons.
First and foremost, Inflation remains HOT. Read More
10.16.23- And Now, for Something Entirely Different: A Global Release of Tensions
It’s been a week since the skies over the Negev Desert filled with something eerily like the flying monkeys of Oz upgraded to Hamas Road Warriors in motorized paragliders, kicking off that third world war we’ve been hearing about all our lives, and not at all the way we expected either, which was more Dr. Strangelove style, with the mushroom clouds billowing everywhere — though, who knows, it might come to that too, before long.
This new catastrophe, quickly globalizing, makes the war in Ukraine seem as comfortable as an old sweater. Read More
Yes, the Alpha and Omega of almost everything that threatens the future of capitalist prosperity and constitutional liberty in America is the Federal Reserve. And its untoward impact goes back decades and decades, taking the form of multiple phases and transmutations as it made its way over the last 110 years to its current malefic incarnation. Read More
As the “soft landing” narrative grows, the risk of a “crisis” event in the economy increases. Will the Fed trigger another crisis event? While unknown, the risk seems likely as the Fed’s “higher for longer” narrative is compromised by lagging economic data.
Global central banks have been snapping up record amounts of gold since the start of 2022 - a trend that should continue as countries look to move away from an "overconcentration" of reserves in the dollar, according to State Street Global Advisors. Read More
Via Washington Post:
The eruption in Israel caught many of us off guard. But to some extents it was a long-expected flashpoint escalation meant to begin the denouement of the Ukrainian conflict, by taking heat off from it.
There are many circulating accounts of all the things that seem “off” about Hamas’ attack, so I won’t recount every single point here as most of you have likely read them in multiple places; things like the very implausible breach of Israel’s high tech gates and defenses, to the unprecedented failures of Mossad and Shin Bet, to Netanyahu’s eerily scripted invocation of ‘Pearl Harbor’, which is very telling considering that Pearl Harbor was also a falseflag attack with the purpose of bringing the U.S. into WW2. Read More
Paul Krugman recently suggested Americans are experiencing a profound "disconnect," but it's the New York Times columnist who is refusing to recognize economic realities.
New government data have some unwelcome news: The public is getting poorer.
Even small moves in interest rates can have big impacts on deficits.
Byzas of Megara must have been positively dumbfounded when he first set foot on the banks of the Bosporus River.
It was the year 667 BC, more than 2,700 years ago, and Byzas was on a mission from the Greek mainland to find new colonies.
His fleet had just landed on the European side of modern day Istanbul. And as he gazed across the river to the Asian side, Byzas could see another small settlement– a tiny colony known as Chalcedon. Read More
10.04.23- It's All Coming Down!
Today all three of the biggest bubbles in history are finally collapsing together.
News of new jobs is supposed to be great, right? So, what kind of weird world do we live in when it is considered horrible? Welcome to Fedworld where most market decisions are nothing but bets on what the Fed will be doing next with its free money for millionaires.Read More
There has been a dramatic spike in the number of Chinese nationals that are coming across our borders. The vast majority of them are men, and the vast majority of those men are of military age. Most of the time, when these men are intercepted by U.S. officials they claim that they have come to apply for asylum in the United States. Read More
Every major economic downturn of the last 110 years bears the mark of the Federal Reserve.
In fact, as long as the Fed has been around, it has swung the economy between inflation and recession. Yet Americans, surprisingly, have tolerated it.
But we shouldn’t expect that to go on forever. We had three central banks before the Fed, and confined each to the ash heap of history. Read More
09.30.23- The Costco Gold Indicator
Can we all agree that once it becomes common knowledge just how ridiculous Modern Monetary Theory is, it'll be a treacherous day for the confidence that Americans place in the Fed?
All I do is write about the Federal Reserve. I've been talking about them for the last 15 years nonstop and have constantly been skeptical of monetary policy in this country. This policy can best be described as a combination of Sam Bankman-Fried's and Bernie Madoff's management styles—combined and on a sovereign scale. Read More
09.29.23- What Should the Federal Reserve Do Now?
Inflation in the United States has fallen from its elevated levels a couple of years ago, although not quite all the way to the Federal Reserve’s target average rate of two percent per year. The Federal Reserve has been raising the federal funds rate progressively since early 2020 to lower inflation. It is well known that these increases affect the economy and inflation only over time. The effects of these increases still are playing out. Read More
09.28.23- Lawmakers Oppose Digital Dollar. There's Just One Problem.
There’s a move afoot to prohibit a central bank digital dollar from ever being issued by the Fed – without “authorization” that is – according to this article shared by E.G.(with our thanks):
When I read this article (the first time) I thought, “Well, that’s good, someone out there realizes what Catherine Fitts and many others including yours truly have been warning about: a central bank digital currency is too easy to couple to a social engineering system, and affords no privacy. Read More
09.27.23- A Crisis Is Coming:
We recently wrote The Lag Effect Unveiled to appreciate why it takes time for higher interest rates to inflict economic damage. We follow that up with a discussion of something equally worrying that also lags Fed rate hikes. A financial crisis will likely follow the Fed’s “higher for longer” interest rate campaign.
We are not clairvoyant in predicting a crisis; however, we do appreciate financial history. Read More
The Federal Reserve’s Federal Open Market Committee (FOMC) on Wednesday left the target policy interest rate (the federal funds rate) unchanged at 5.5 percent. This "pause" in the target rate suggests the FOMC believes it has raised the target rate high enough to rein in price inflation which has run well above the Fed's arbitrary two-percent inflation target since mid-2021. Read More
09.25.23- And Now, for Something Entirely Different: Understanding the
Paul Craig Roberts –Before I answer the questions it needs to be clearly stated that my answers are not merely my opinion, but hard facts supported in the historical record. Like John Maynard Keynes, I like to keep my views in accordance with the facts. In the case of what is called “the Civil War,” the facts are clear enough.
Lincoln and the Republicans understood that the 2 March 1861 Morrill Tariff would result in secession of Southern states from the Union. On the same day in an effort to prevent secession, the Republicans passed and Lincoln endorsed the Corwin Amendment. The Corwin Amendment would have made it impossible for slavery to be abolished. Read More
In a world full of unimaginable absurdity, we spend a lot of time thinking about the future… and to where all of this insanity leads.
“Future Headline Friday” is our satirical take of where the world is going if it remains on its current path. While our satire may be humorous and exaggerated, rest assured that everything we write is based on actual events, news stories, personalities, and pending legislation. Read More
09.22.23- 5 Ways the Fed Just Made Americans Poorer
The FOMC met Wednesday and Thursday.
After that meeting, Federal Reserve Chairman Jerome Powell announced that the Fed would (at least momentarily) pause their recent string of interest rate hikes.
This decision surprised almost no one. Read More
09.21.23- Fed Continues to Signal Another Rate Hike
The Federal Reserve’s Federal Open Market Committee (FOMC) voted to hold its federal funds rate target range at 5.25 to 5.50 percent on Wednesday. However, FOMC members also signaled that another rate hike is likely in the fourth quarter of this year.
In the latest Summary of Economic Projections, twelve of nineteen FOMC members projected rates would fall between 5.50 and 5.75 percent by the end of 2023. The remaining seven FOMC members projected rates would remain in the current 5.25 to 5.50 percent range. Only twelve members vote on the policy rate—the seven governors, the New York Fed president, and four of the remaining regional Reserve Bank presidents. And we do not know what those specific twelve members have projected. Still, the latest projections suggest that another rate hike is on the horizon. Read More
09.20.23- Central Bankers
Systematic monetary policy means a framework where tools such as the level of the Fed funds rate and the size of the Federal Reserve’s balance sheet maintain a reasonably stable and predictable relationship with observable economic data such as output, inflation, employment, and the ‘gap’ between real gross domestic product and its estimated full-employment potential. Departures from systematic monetary policy distort behavior in ways that cause misalignments between financial quantities and real economic quantities, and as a result, they invariably produce damage as the two are ultimately realigned. Read More
09.19.23- The Soft-landing Narrative
The US recession is merely delayed, not canceled. The soft-landing narrative is a myth.
The government's fiscal stimulus in 2023 has temporarily lifted the GDP growth rate. However, fiscal stimulus is not a reliable source of economic growth. It undermines productivity in the long term. It also creates problems such as higher taxes, higher interest rates, and harmful destabilizing inflation. Read More
09.18.23- Deflation, Stag or Crack-Up Inflation?
Goldilocks is transitional; it’s what’s next that will represent the next major macro theme
Ever since the the 30 year Treasury bond yield (one ‘top-down’ macro tool NFTRH uses to gauge the environment so that we may invest in, speculate upon or avoid certain situations, accordingly) broke its Continuum of pleasantly declining long-term Treasury bond yields, macro nerds have been called to task in order to correctly interpret the forward backdrop that this break implies. The note at the upper right of the chart asks the key question. Read More
09.16.23- Lots of Red Ink at the Fed
The Federal Reserve has officially reported a loss of $57 billion for the first six months of 2023. Quite a number! So the “Federal Reserve Banks Combined Quarterly Financial Report as of June 30, 2023” (CQFR)—a little-known document—is especially notable for its red ink. We can anticipate an annual loss of over $100 billion for 2023 and for the losses to continue into 2024.
How does a central bank, especially the world’s greatest and most important central bank, lose tens of billions of dollars in six months? An average person, influenced by the mystique of the Fed, might understandably be baffled by this fact. Read More
When the Fed raises interest rates to curb inflation, ripple effects spread across the economy. Some of the impacts are negative (especially if you owe a lot of money), but others are positive for savers.
Today, let’s take a break from exploring the downsides of higher interest rates. Let’s focus on the positive. Read More
09.14.23- And Now, for Something Entirely Different: Rothschild Admits ESG Failure As Globalists Shift To “Inclusive Capitalism” Agenda
09.12.23- We're Living On Borrowed Time!
Peter Schiff recently appeared on Nino’s Corner with David Nino Rodriguez to talk about the trajectory of the economy. Peter explained why the dollar is doomed to crash and what we can do to prepare. He also emphasized that the powers that be have managed to kick the can down the road for a lot longer than he expected.
But you can’t kick the can down the road forever. Eventually, you will run out of road. Read More
At the Federal Reserve’s annual conference in Jackson Hole, Wyoming, participants came to a rather disturbing economic realization.
The so-called “experts” at the central banks who are trying to lead the United States out of the current economic mess marked by persistent inflation – could be doing so without understanding where things truly are, nor in what direction they are truly headed. Read More
09.09.23- And Now, for Something Entirely Different: A Theory of the Game
Hillary Clinton’s 2016 loss was a bigger shock to the Washington DC deep state Blob than Donald Trump’s victory. But the dynamics of this trauma operated at many levels. At the most superficial level was the hysterical response of Democratic Party rank-and-file women who regarded Donald Trump as the most extreme and horrifying embodiment of an archetypal “bad daddy.” This was all sheer psychodrama of course, but women are engrossed with psychodrama — generating it and relishing it — which men often fail to appreciate. Read More
In July of last year as the hype surrounding the Covid pandemic was finally dying out, I came across a video promoting a barely publicized project called the “Council for Inclusive Capitalism.” The group, headed by Lynn Forester de Rothschild, is the culmination of decades of various globalist agendas combined to represent the ultimate proof of conspiracy.
Remember when people used to say that global governance by elitists was a paranoid fantasy? Read More
09.07.23- The U.S. Fiscal Situation Deteriorates
The price of gold and silver can be influenced by a variety of factors, including economic conditions, investor sentiment, and geopolitical events. The U.S. fiscal situation and the possibility of a debt crisis can play a role in affecting the prices of these precious metals, although the relationship is not always straightforward. Read More
When the first shot rang out at Dealey Plaza on November 22, 1963, most bystanders didn’t even realize that it was the sound of gunfire.
But Texas Governor John Connally was an avid hunter. He recognized the sound, sensed danger, and turned behind him to check if President Kennedy was OK. Read More
Precious metals markets enter trading for the month of September with bulls hoping positive seasonal forces kick in.
Gold and silver markets have traded mostly lower since late spring. They did rally, though, during the second half of August. Read More
09.02.23- And Now, for Something Entirely Different: The Upcoming Gold Bull Market: How High Will Gold Prices Go?
Gold is no different than any other asset class: it becomes popular, rises in price, is overvalued, and ultimately represents a poor investment. Other times, it undergoes periods of investor disinterest, suffers sustained price declines, becomes undervalued, and ultimately represents an excellent investment.
09.01.23- What the Central Bank Cartel has Planned for You
The Austrian(TA): What is the global currency plot, and who benefits most from the success of this effort?
Thorsten Polleit (TP): The global currency plot denotes a rather inconvenient truth: the existence of states (as we know them today) sets into motion a dynamic process toward creating a single world fiat money controlled by a world central bank, and most likely a central world government. The beneficiaries will be the very few—the “elite”—in charge of running the state and those few privileged by the state, such as big business, big banking, Big Pharma, and Big Tech. However, the great majority of the people will suffer a very great disadvantage. In fact, a single world fiat currency would most likely entail tyranny. Read More
One of The Fed’s favorite inflation indicators – Core PCE Deflator – rose 4.2% YoY in July (as expected but higher than June’s +4.1%). Headline PCE jumped up to +3.3% YoY (also as expected) – the biggest jump in YoY prints since June 2022… Read More
Jackson Hole: "Does my R* look big in this?"
The Jackson Hole central banking symposium has been running at its Wyoming venue since 1981. As such, it spans almost the entire neoliberal economic era in which central banks have been independent rockstars, not the boring civil servants following a political lead of prior decades. Ironically, 2023’s event, titled "Structural Shifts in the Global Economy," pointed out an intellectual hole at central banks and their sudden lack of power, prompting look-in-the-mirror criticism. Read More
08.29.23- Will This Be The Fall Of Falls?
For years we have both warned investors about the consequences of a system based on unlimited money printing, debt creation and money debasement.
The world economy and the financial system is now on the cusp of a precipice.
No one can forecast when the coming violent turn will come.
It can take years or it can happen tomorrow. Read More
The Most Devastating Interview of my Life -- with Dr James Thorp: How HHS Paid Millions to get 1000s of Drs to Damage Women; Hurt, Kill Babies.
Please forgive my recent silence. I am locked in an apartment in Brooklyn, copyediting a new book (out in November with Chelsea Green), titled Facing the Beast. You can guess what it is about. Read More
Powell's full speech is below but to summarize - "we ain't done yet."
Chair Powell said The Fed is prepared to raise interest rates further if needed and intends to keep borrowing costs high until inflation is on a convincing path toward the Fed’s 2% target.
Federal Reserve Chair Jay Powell’s speech at Jackson Hole this week promises to give stocks a boost. But it’s likely to be short lived as the liquidity outlook soon worsens.
After months of rising almost uninterruptedly, stocks finally hit resistance as longer-term real yields rose to a 15-year high. The main driver though - a belief that the Fed will up its estimate of the neutral rate at Jackson Hole - is likely to come unstuck, prompting a relief rally in stocks. Read More
In their inaugural day 'family photo', BRICS leaders posed without Russia's President Putin, as FM Lavrov took his place given the ICC arrest warrant and Rome Statute would require the South African government to seek his arrest.
Putin addressed the summit remotely, and emphasized in the Russian-language speech that de-dollarization is "gaining momentum". Read More
The Coming Collapse of the
It won’t be long before governments around the world, including the one in Washington – self-destruct.
Strong words, but anything less would be naïve.
As economist Herbert Stein once said, “If something cannot go on forever, it has a tendency to stop.” Case in point: fiat money political regimes. Interventionist economies of the West are in a fatal downward spiral, comparable to that of the Roman Empire in the second century, burdened with unsustainable debt and the antiprosperity policies of governments, especially the Green New Deal. Read More
08.22.23- The Fed Is In A No-Win Situation
08.21.23- Two Years to Bust
Financial commentators marvel how the Fed has been able to increase the fed funds rate from 0% to 5.3% without a major financial accident (other than the failure of a few regional banks).1 The previous time the fed funds rate was this high was in 2007, when there was $51 trillion in total debt instead of the current $94.7 trillion;2 and everyone remembers what that rate produced: the largest financial crisis in history. Read More
In what is now a ten-year-old interview, Jim Rickards shocked his audience. Sadly, his controversial views then might be considered good news today…
After being pressed about his somewhat extreme economic predictions, he added some context:
Among the many alarming revelations from the "Facebook Files" is the discovery of a strange official policy that dominated the platform in the COVID-19 years.
I’ve long been critical of the Federal Reserve – in fact, I wrote a book called End the Fed way back in 2009. My position on the Fed’s failings have been clear for a long, long time.
Even so, the Fed’s failure to properly manage price stability has rarely been more clear than it is today.
Many mainstream economists (Paul Krugman and Ben Bernanke spring to mind) would tell you the Fed is an indispensable institution, and our economy simply couldn’t function without it. Read More
From a geopolitical perspective, the U.S. today has never been weaker than since the post-Vietnam era.
Remember the images of U.S. helicopters taking off from its South Vietnamese embassy in 1975, loaded with refugees trying to escape the country?
It was a national humiliation. Read More
08.15.23- Powell's 'Abracadabra'
The Fed has two mandates – Maximum Employment and Price Stability
If we look at price stability, the Fed has failed miserably.
The Fed employs 3,000 people in Washington DC of which 300 have a Ph.D. degree. Read More
As a young first-year graduate student in 1997, I was required to take a class called 'Banking and Monetary Policy'. As I registered, the course itself sounded rather interesting - my undergraduate work had been in the field of what is now called Molecular Biology. It was an introductory course, taught by a professor who was in exile from South Africa. Read More
08.12.23- Why Uncle Sam Really Hates Cash
Created by the Federal Reserve, the FedNow instant payment system went operational on July 20, 2023.
If you’ve ever sent a wire, ACH or e-check through a bank, and were frustrated that it took up to five business days to clear, that problem may be solved. At least, that’s what the Fed’s description of the service says:
It is available to depository institutions in the United States and enables individuals and businesses to send instant payments through their depository institution accounts. The service is a flexible, neutral platform that supports a broad variety of instant payments. Read More
International Man: Controlling information has always been crucial in military conflicts.
How has information warfare evolved over time?
Doug Casey: Information has always been, and still is, the single most important factor in any conflict. Read More
Money supply growth fell again in June, remaining deep in negative territory after turning negative in November 2022 for the first time in twenty-eight years. June's drop continues a steep downward trend from the unprecedented highs experienced during much of the past two years. Read More
Last week, Fitch Ratings downgraded the US’s long-term credit rating from AAA to AA+. While the downgrade won’t significantly impact the US government’s ability to borrow, it should serve as a wake-up call because there is a much bigger problem looming on the horizon: a market-driven downgrade of the US dollar.
The bond market got pummeled last week with four losing days before a rally on Friday driven by a weaker-than-expected jobs report. That rally wasn’t enough to recover all the losses, and yields finished the week above 4% across the board. Read More
As debt downgrade concerns push up bond yields, metals markets are facing selling pressure.
Credit ratings agency Fitch this week issued a surprise downgrade of the U.S. government's once vaunted AAA credit rating. Recent political brinksmanship surrounding the debt ceiling helped prompt the move. But broader concerns about the size and sustainability of the national debt itself also figured into the downgrade. Read More
At a press conference early 2023, member of the Executive Board of the German central bank Joachim Wuermeling made clear that the soundness of the central bank’s balance sheet, in light of general losses, is guaranteed by the bank’s gold revaluation account. Wuermeling’s testimony implies the bank is willing to use its gold revaluation account to cover losses.
The President of the Dutch central bank made a similar remark in November 2022. These statements accentuate gold’s role as a remedy regarding financial challenges created by boundless money printing. Read More
08.04.23- The Fed Hits
The US economy was pushed to extremes during the pandemic recession and subsequent recovery. The unemployment rate peaked at 14.7 percent, the highest in the post-World War II period. Inflation reached its highest rate in 40 years, prompting the Fed to raise short-term interest rates to their highest levels since 2007.
As of June, the economy hit another dubious milestone: Inflation has now reached 3,000 percent under the Federal Reserve. Read More
In today’s lead article, Jesse Felder decries the numerous stories in recent financial headlines written by analysts who are inhaling the “soft landing” narcotics that have floated the recent stock rally, and he notes how this euphoric disconnect from the harsher realities below happen before all major market crashes during deep recessions:
Investors have now gone “all in” on the soft-landing narrative, just like they did in 1989, 2000 and 2007. Read More
08.02.23- Here’s What the Fed Does Next
The Fed raised interest rates again last week. But that’s the past. What does the future look like?
Today, you’ll receive a full recap of what happened with last week’s Fed meeting. I’ll explain what happened in terms of policy moves, what Fed Chair Jay Powell believes will happen next, and what will actually happen. Read More
The Federal Reserve– the most critically important central bank in the world– is completely, hopelessly insolvent.
This isn’t some wild conspiracy theory or overly dramatic interpretation of the facts; we’re extremely data-focused in this organization and base our conclusions on indisputable, open-source figures. Read More
07.31.23- Bond Market’s Mirror Image
After the most recent FOMC meeting, Chairman Powell issued an official statement explaining the decision to raise interest rates another quarter-point.
That brings the Federal target funding rate to 5.25-5.5%, the highest rate in over two decades. (Granted, those were two decades of perpetual emergency, the lowest-for-longest rates in U.S. history.)
Powell summarized the FOMC decision as follows: Read More
Interventionists always blame inflation on everything and anything except the only thing that makes aggregate prices rise: Issuing more units of currency than the real demand. Seller inflation is the same excuse and fallacy as cost-push inflation. A way to confuse citizens and assign causation to something that cannot make aggregate prices rise. Read More
“In determining the extent of additional policy firming that may be appropriate to return inflation to 2 percent over time…”
The Fed’s FOMC raised its five policy rates by 25 basis points today, which pushed the upper limit of its policy rates to 5.5%, the highest since January 2001. The Fed had broadly telegraphed this move after the “very hawkish skip” meeting in June, when it projected two more rate hikes this year. The Fed has hiked by 525 basis points in 16 months, the fastest rate-hike cycle since 1980, to deal with the worst inflation in 40 years. The vote was unanimous. Read More
07.26.23- Race to the Bottom
The currency wars are alive and well. Here’s the latest battle…
Over the past nine months, the Japanese yen rallied 13% against the dollar. But now the yen has started to fall in value.
This decline is not surprising. Japan’s economy has been flirting with recession. A new recession, likely in my view, would be the ninth recession since the historic stock market and real estate crash in Japan in 1990. Read More
We’ve written before about how economic catastrophes often start gradually, then suddenly accelerate into utter chaos.
Now it’s time to apply that idea to a different topic: de-dollarization.
Mike Maloney surmises that the dollar will, at first, slowly be replaced by alternatives as the global reserve currency. Then, after alternatives build momentum (e.g. BRICS nation currencies), they could get adopted “suddenly.” Read More
The Federal Reserve launched its FedNow instant-payments service Thursday, following several years of developing a system officials say will allow the faster flow of cash for businesses and individuals.
Whether it’s providing instant access to paychecks, allowing for last-minute bill payments or sending government payments out to individuals, the system is expected to improve the flow of money through the U.S. economy. Read More
Did you know that 2022 was the WORST year for US Treasuries in American history?
The benchmark 10-year Treasury fell nearly 18%, and the 30-year Treasury collapsed over 39%. Many other bonds did even worse. Read More
07.20.23- Your Bidenomics
Following the government’s panicked response to the Covid pandemic, the resulting economic devastation and two-plus years of historic inflation thus far…
There is finally some good news!
In June, for the first time in 26 months, US workers’ real weekly earnings (a week’s worth of wages adjusted for inflation) grew on an annual basis, according to data released this week from the Bureau of Labor Statistics. Annual real weekly wages were up 0.6% last month, a rate that’s a tick below the 0.7% gain seen in February 2020. Read More
07.19.23- Great King’s Days Are Numbered
As I’ve been warning my readers, the most significant development in international finance since 1971 will be unveiled just over one month from today.
A new BRICS gold-linked currency will be announced on Aug. 22 at the BRICS Leader’s Summit conference in Durban, South Africa (the BRICS are Brazil, Russia, India, China and South Africa). Read More
Is a backlash coming?
It’s undeniable that PINO – President-In-Name-Only – Joe Biden is massively corrupt in every possible way. From leveraging his position as vice-president for cash to covering up for his meth-addled, stripper-banging, scumbag son – who is currently spilling his Bolivian party powder all over the White House – this senile pervert is a one-man crimewave. Read More
Investors are keen to declare victory for the Federal Reserve in the war on inflation. But the June CPI data is only encouraging for bond bulls if you look at the world in a vacuum.
Yes, there was a lot to like in last week’s report: Headline CPI rose just 0.2% and the year-over-year rate fell 1% to 3.0%, the lowest since March 2021. Core inflation rose 0.2%, to 4.8% y/y, down from 5.3% in May and the peak of 6.6% in September 2022. Read More
(Editor's Note: Janet Yellen is another failed affirmative action hire. - JSB)
Janet Yellen, the current Secretary of the Treasury and former head of the Federal Reserve (2014-2018), assured us in 2017 there wouldn’t be another financial crisis during our lifetimes.
Maybe that was just wishful thinking. I can forgive her for failing to predict the 2020 coronavirus pandemic panic, the Federal Reserve’s multi-trillion-dollar money-printing stimulus spree (and the subsequent 2nd, 3rd and 4th largest bank collapses in U.S. history). Read More
07.13.23- Even If Jerome Powell Is Successful, We Still Lose
In some ways it has been like two heavyweight sluggers battling it out over the course of an extended bout,exchanging one haymaker after another. With each monstrous blow, the receiver is staggered temporarily only to reform and then unleash one of his own. Back and forth, back and forth until such time a winner will be declared - and we all lose.
I hesitate to elevate the Fed and its rate-hiking regime to the status of a serious challenger, though it qualifies for any short run period. Read More
07.12.23- The Goldilocks Zone
The latest meeting minutes of the Federal Open Market Committee (FOMC) offers valuable insights into the make-believe nature of monetary policy. While the true motives of the Fed's inner circle may forever remain a mystery, it is evident their narrative revolves around the quest for an ideal economic state or finding a Goldilocks Zone of economic data. Only when the data aligns perfectly will the Fed’s mission be complete and the battle against inflation be won. Read More
I had this exact discussion at a family graduation party on Saturday. My brother-in-law and I were talking about all the woke bullshit they have been jamming down our throats and we eventually got around to taxes. I then launched into a tirade against taxes and the government that enforces them at the point of a gun. I told him everyone kept 100% of their earnings up until 1913 and the country had been able to grow and prosper up until that time without an income tax. He then said what the regime media and the government has drilled into the minds of the masses – “but who would build and maintain the roads and infrastructure of the country?”. Read More
On August 4, 1964, two US Navy destroyers were conducting intelligence patrols in the Gulf of Tonkin off the coast of Vietnam, when the task force commander grabbed the radio and reported that they were under attack by three North Vietnamese torpedo boats.
The news traveled very quickly all the way to the Pentagon, and Defense Secretary Robert McNamara briefed President Lyndon Johnson on the situation. Read More
07.08.23- A Cure Worse Than The Disease
Yesterday’s data releases gave markets little reason to revisit the narrative from Wednesday’s FOMC minutes. Recall that these revealed about as hawkish of a hold as possible, given that some FOMC members had actually wanted to raise rates, before participants judged it “appropriate or acceptable” to hold. Particularly the latter does not sound like a ringing endorsement and is quite possibly the weakest support for the decision without actually casting a dissenting vote. Read More
07.07.23- The Federal Reserve Has Been a Disaster for America
Like all indoctrinated economics PhDs, I used to teach students that the Federal Reserve was created as a central bank in order to provide cash to banks experiencing a run on deposits so that bank failures would not become general and collapse the money supply and, thereby, employment and output. It all sounds so reasonable and rational until you realize that finance least of all is idealistic. Read More
International Man: Robert F. Kennedy Jr. is challenging Joe Biden to be the Democratic nominee for the 2024 election.
Unlike most Democrats, RFK Jr. is against escalating the war in Ukraine and seems to be generally anti-war. Likewise, he’s not on board with a lot of the woke insanity. Read More
07.05.23- Our Purchasing Power Is Getting Wrecked
This week, Your News to Know rounds up the latest top stories involving gold and the overall economy. Stories include: Mike Maloney goes deep into the inflation issue, a Great Economic Reset, and Indian households have more physical gold than any single central bank.
Purchasing power is getting destroyed, and those without assets suffer most Read More
July 4 is upon us, and many Americans are excited to celebrate their so-called independence.
How will this July 4 be any different from that of 2020?
Haven’t the past three years revealed that Americans not only take liberty for granted but readily reject it?
Is it not the least bit curious that some, if not most, of those who’ll be setting off fireworks also begged to be locked down and masked? Read More
This week Federal Reserve Chair Jerome Powell delivered his semiannual testimony to Congress. A main feature of the discussion was the status of rate hikes and the fight against inflation.
In short, Powell’s inflation fight isn’t over.
Core CPI, which excludes food and fuel prices, is increasing at an annual rate of 5.3 percent. Similarly, core personal consumption expenditure (PCE) prices are up 4.7 percent from a year ago. Read More
06.29.23- The Fed’s “One Weird Trick”
The U.S. economy has been saved time and again over the past two decades by this one weird trick:
“Bringing Demand Forward” by lowering interest rates and lending standards so Americans could continue to buy stuff they didn’t really need because the monthly payment dropped as interest rates were pushed toward zero. Read More
We tend to focus a lot on the Federal Reserve’s interest rate policy, while the central bank’s balance sheet stays in the background. But the balance sheet arguably has more impact on the economy over the long run.
Since the Fed began hiking interest rates in March 2022, it has also shrunk the balance sheet. But balance sheet reduction hasn’t been aggressive. In fact, the decline in the balance sheet since the pandemic is like a drop of water in the ocean compared to the expansion we’ve seen since 2008. Read More
06.26.23- And Now, for Something Entirely Different: A Legacy for America’s Children
06.24.23- Apocalypse FedNow
Within Fed Chair Jerome Powell’s recent congressional appearance is regulatory signaling with large implications for stablecoins, the dollar, CBDCs, and bitcoin...
06.23.23- Economies and Central Banks: The Disconnect
This week we bring you a short half-year update on the gold and silver price, but after that we are once again forced to ask “What Are Central Banks Playing At?”. They have all the potential to do great things like a small child (if you will) but also like a small child they keep shaking a broken toy asking why it’s broken and continuing to do the very things that broke it in the first place. Nothing right now suggests they know what they’re doing or that they are prepared to learn. Luckily for us, we know what happens next…that’s why we invest in gold and silver bullion. Read More
I want you to imagine, for a moment, a future world in which everything we now know about functioning and surviving within the economy is completely upended. This world has gone fully digital, meaning people live within a cashless society where physical monetary interactions are abandoned or prohibited, replaced by CBDCs. All transactions are tracked and traced, nothing is private any longer unless you are operating as a criminal within a black market. Read More
On August 4, 1964, two US Navy destroyers were conducting intelligence patrols in the Gulf of Tonkin off the coast of Vietnam, when the task force commander grabbed the radio and reported that they were under attack by three North Vietnamese torpedo boats.
The news traveled very quickly all the way to the Pentagon, and Defense Secretary Robert McNamara briefed President Lyndon Johnson on the situation. Read More
06.20.23- Don’t Skip!
In a leak to The Wall Street Journal earlier this month, the Federal Reserve no doubt believed they were adding clarity to the market situation. But in true Fed tradition, all they did was add confusion that will trouble markets for months to come, if not longer. Let’s untangle the Fed’s latest web of miscommunication… Read More
The Federal Reserve has just ended a streak of ten consecutive interest rate hikes in the space of 15 months.
Elon Musk does not disarm.
06.16.23- Sound Money Is Required for Real Budget Discipline
News here in the USA has been full of the latest farce known as raising or not raising the debt ceiling. After the usual dog-and-pony show, a budget deal was reached. But was it progress? It was a foregone conclusion that the debt ceiling would be raised, yet again, for the simple mathematical reason that unless the budget is cut, via spending cuts or increases in taxes, it can do nothing else. Read More
People in the U.S. are dying at higher rates than in other similar high-income countries, and that difference is only growing. That’s the key finding of a new study that I published in the journal PLOS One.
In 2021, more than 892,000 of the 3,456,000 deaths the U.S. experienced, or about 1 in 4, were “excess deaths.” In 2019, that number was 483,000 deaths, or nearly 1 in 6. That represents an 84.9% increase in excess deaths in the U.S. between 2019 and 2021. Read More
06.14.23- The Great Dollar Paradox
The de-dollarization story is everywhere.
You see it in publications from The New York Times to The Economist and in financial media including CNBC, Fox Business and Bloomberg.
The idea is that countries around the world are preparing to ditch the dollar. This takes many forms including efforts by China to pay for imported oil from Saudi Arabia and the UAE with yuan and a major bilateral agreement between China and Brazil that allows each country to pay for exports from the other using their local currencies. Read More
06.13.23- The Fed is Once Again Using the Wrong Tools to End Inflation
There are two primary reasons why inflation has remained so persistent despite the Fed raising rates from 0.25% to 5.25% in the span of 14 months.
Today we’re going to dissect #1. Read More
06.12.23- The US Economic Fairytale - Save The System Or The Currency
When Humpty Dumpty fell off the wall and took a big fall, “all the king’s horses and all the king’s men could not put Humpty-Dumpty together again.”
I see a similar fate for the US debt egg, whose cracks are just about, well… everywhere. Read More
So, here we are… it’s 2023 and the world seems to believe that we are on the verge of both World War 3 AND a terminator-driven apocalyptic nightmare from which there is no escape. I’m sure that the most tempting reaction is to simply throw your hands high into the air, quit your job(s), stop by the store on the way home, purchase copius amounts of alcohol, marijuana, psilocybin, whatever drug of choice you have and just party and f*** your way to the next aspect of this game that we call “life.” If that’s the way you want to go heading into the end, I wouldn’t blame you, but I will judge you. I prefer to take a more adult, intelligent tact at viewing our current landscape. With a particular focus on this thing we call artificial intelligence. Read More
“Does anyone believe American propaganda anymore?”
This is the question of investigative journalist Matthew Taibbi.
We can offer no answer of course. Yet we hazard the number of those who do dwindle daily.
You recall the dynamiting of the Nord Stream 2 energy pipeline. Through this underwater tube Russia funneled natural gas to Germany. Read More
06.08.23- Is Inflation Taxation?
I received an interesting follow up question from Heath B. He says,
“This is a follow up question for the post you wrote about ‘Why Does the Federal Reserve Target 2% Inflation?’
Milton Friedman once stated that, ‘Inflation is taxation without legislation.’ Are you able to give your insight into that claim? If that is correct then why do we as American citizens allow that to happen? One of the reasons we fought the revolutionary war was because of taxation without representation.” Read More
06.07.23- The Trouble with Printing Money
Hello everyone, thrilled to bring you yet another exciting development in our ongoing content evolution. This, my friends, is our next significant move in our newly implemented content schedule – the inauguration of Throw Back Tuesday. But before we dive into that, allow me to reassure you that the familiar two-part content you’ve come to expect and appreciate is not disappearing – it’s merely moving to a new slot on Fridays, ready to kickstart your weekend with the in-depth analysis and perspectives you cherish. Read More
We have hardly been the first nor the last to realize that rising rates “break things.”
We’ve all seen the disastrous credit events in the repo crisis of late 2019, the UST debacle in March of 2020, the gilt implosion of October 2022 and, of course, the banking crisis of March, 2023.
And behind, beneath, above and below each of these debacles lies a bemused central banker. Read More
In the old Soviet Union, citizens were not required to be a member of the Communist Party. But if you were not, you could never expect to rise far professionally or socially. You would never be the head of a department in university, a factory manager, much less the General Secretary. They were always recruited out of the party.
Party membership was proof of loyalty. It was a demonstration that you were willing to put loyalty over morality. Rising high in the party also meant that others in the ruling class likely had something on you. No one gained power without other powerful people knowing of your grim deeds. That way there was mutual trust, or, to put it another way, mutual blackmail. Read More
On Wednesday, Federal Reserve Governor Philip N. Jefferson offered insights on the economy and the role of the Fed. The irony is evident as we find that those entrusted with overseeing the economy appear to be continuously involved in a journey of self-discovery, yet their understanding often lacks any connection to the real-world economy.
The moniker of my website originated from a quote by David Walker, then Comptroller General of the U.S., in 2007. I wholeheartedly endorsed Walker’s viewpoint and become politically active in trying to get Ron Paul elected as president in 2008 and 2012. It was a fruitless effort, as the uni-party in Washington DC, controlled by the dark forces of the Deep State, do not allow men and women who truly want to reduce the size and scope of government to ever get elected. His warning sixteen years ago is a perfect example of being right but being early. When talking about the decline of empires, you are really deliberating about a process, not an event. Read More
The Federal Reserve’s new digital payment system, FedNow, will launch in July.
I talked about this in my essay yesterday.
FedNow is a milestone in the creation of a central bank digital currency (CBDC). Read More
The character Mike Campbell in Ernest Hemingway’s 1926 novel The Sun Also Rises was asked about his money troubles and responded with a vivid description embracing self-contradiction: “‘How did you go bankrupt?’ Bill asked. ‘Two ways,’ Mike said. ‘Gradually and then suddenly.’”
Ground-hugging interest rates for more than a decade kept the inefficient and the incompetent in business. Now, the jig is up, with a Mother’s Day weekend corporate massacre that saw the bankruptcies of seven corporations, each with liabilities of nine figures or more—in four cases, with more than a billion dollars in liabilities each. Read More
05.29.23- Facts vs. Fed-Speak: A Comical History with Tragic Consequences
Below, we look at simple facts in the context of complex markets to underscore the dangerous direction of Fed-Speak and Fed policy.
Keep It Simple, Stupid
It’s true that, “the Devil is in the details.”
Anyone familiar with Wall Street in general, or market math in particular, for example, can wax poetic on acronym jargon, Greek math symbols, sigma moves in bond yields, chart contango or derivative market lingo. Read More
The kids are two years behind in education. Inflation still rages. White-collar jobs are disappearing thanks to the reversal of Fed policy. Household finances are a wreck. The medical industry is in upheaval. Trust in government has never been lower.
Major media too is discredited. Young people are dying at levels never seen. Populations are still on the move from lockdown states to where it is less likely. Surveillance is everywhere, and so is political persecution. Public health is in a disastrous state, with substance abuse and obesity all at new records. Read More
At the start of May we explained that it's not just the Fed's rate hikes that are behind the nascent regional bank crisis (because with Fed Funds rate at 5.25% and both T-Bills and money market funds offering similar yields, there is no way small banks can compete with these returns, prompting a bank jog (which periodically turns to a sprint) and deposit flight from both checking and saving accounts). Read More
The Biden regime won’t admit it and neither will most Democrats because it would only add to their reputation of being unable to run a successful economy, but it’s pretty much official now: Inflation is out of control despite the fact that the Federal Reserve has been hiking rates to reverse price spikes. Read More
05.24.23- Crash Course 2.0: The Fed
05.23.23- The Federal Reserve’s Anti-inflation Policy Makes No Sense
Another agenda is in play
Dear readers and fellow economists, the Federal Reserve is treating a rise in prices from supply shocks and disruptions from the Covid lockdowns and sanctions against Russia, Iran, and other countries as if it were a monetary inflation. It is true that too much money is chasing too few goods and services, but the cause is supply shortages and not excess consumer demand. Read More
Getting my in-laws out of Ukraine last year felt like it was as complicated as planning the Normandy invasion.
My wife is Ukrainian, and her family had been stuck in Kiev since the start of the war. For months leading up to the invasion, they ignored the Russian troops massing on the border and casually rejected my offer to fly them out of the country. Read More
Are you the type of person who works hard, saves money, and invests with the intent of accumulating lasting wealth?
If so, you’ve likely noticed that things don’t quite add up between what you’re regularly told about how the economy and financial markets work and what you actually experience. We think there’s more to this than just dollars and cents. Read More
“Every good tree bringeth forth good fruit,” says Matthew — “but a corrupt tree bringeth forth evil fruit.”
Today we are in transit. We lift our siege of Jekyll Island, Georgia… and take to the aerial ways.
Our destination is the Maryland city of Annapolis, by way of the Baltimore-Washington International Airport. Read More
05.18.23- Fed Up Yet?
You would think the Fed wanted housing to become as overpriced as possible, having supported the market with $2.575 trillion in purchases of mortgaged back securities on its balance sheet to keep those securities flowing through with very low yields. That translated downward, of course, to very low mortgage rates, which the Fed sustained throughout the post-Covid years when housing prices were skyrocketing at their fastest rate to toward their highest prices ever, making housing unaffordable for just about everyone. Read More
05.17.23- The Creature From Jekyll Island
The New Jersey railway station was bitterly cold that night. Flurries of the year’s first snow swirled around street lights. November wind rattled roof panels above the track shed and gave a long, mournful sound among the rafters…
At a gate seldom used at this hour of the night was a spectacular sight. Nudged against the end-rail bumper was a long car that caused those few who saw it to stop and stare. Read More
The Fed’s fight has become much more complex this month. Inflation is fighting back harder all of a sudden, while the US debt ceiling is putting bond markets and banks at considerable extra risk by driving bond yields up even faster than the Fed was doing. This extra thrust is happening just as the Fed was trying to end its rate increases and even as additional banks are poised to collapse from the already-high bond rates. The situation appears to be cascading into a nuclear market meltdown. Read More
05.15.23- Circa: Now!
America’s economic landscape is becoming littered with one steaming pile after another. The primary offenders include consumer price inflation, interest rates, gross domestic product, and unemployment. Here we’ll take a sniff of the unpleasant odor that’s wafting around us.
To begin, consumer price inflation is still well above the Federal Reserve’s 2 percent target. In fact, the Bureau of Labor Statistics reported this week that consumer price inflation, as measured by the consumer price index, is increasing at an annual rate of 4.9 percent. Read More
Every headline in the financial press earlier this week says the same thing. The Fed’s “Great Pause” has now commenced.
The Federal Reserve raised interest rates by a quarter point—and could be done.
Well, they might be done “raising” rates, but they shouldn’t be in the rate setting business—up, down or sideways— in the first place. That’s because market capitalism doesn’t work if financial asset prices are being pegged artificially and falsely by a 12-man monetary politburo rather than the vast throng of suppliers and users of funds in the global marketplace. Read More
05.12.23- The Dynamics Driving the Dollar Down
This article examines the currency imbalances between US dollars and the other currencies and concludes that should foreign holders decide to reduce their dollar exposure, the consequences for its value would be dramatic.
The dollar’s problems should be laid at the door of the wishful thinkers who think the state knows better than free markets. It is that which has led to currency imbalances. Central banks attempting to manage economic outcomes by manipulating interest rates and “stimulating” economic activity have acted in defiance of Say’s law, which defines the relationship between production and consumption, and the true role of a medium of exchange. Read More
05.11.23- The Great Wealth Illusion
It’s no secret that for the past decade and a half the Federal Reserve has made it its mission to create a “wealth effect” in the economy by boosting asset prices. Back in 2010, Ben Bernanke explained, “…higher stock prices will boost consumer wealth and help increase confidence, which can also spur spending. Increased spending will lead to higher incomes and profits that, in a virtuous circle, will further support economic expansion.” And so he began a process of printing money with the explicit purpose of inflating asset prices, a policy that has been continued by each of his successors. Read More
Stagflation is much more likely than Deflation
“Hope is never a strategy.”
This morning: The Market Commentariat think deflation will counter inflation, rates will fall, and recession will be limited. The world is more complex – supply side factors are more volatile. Stagflation is a more likely outcome than recession. Read More
05.09.23- Build Your Own Crystal Ball
At their May 3rd meeting, the Federal Reserve Committee appears to have established two key things (in their estimation).
First, the Fed continues to promote the delusion that the banking system is “sound and resilient.”
05.05.23- What if the Fed Has Lost Control?
The failure of First Republic Bank reveals that the banking system isn’t nearly as sound as Treasury Secretary Janet Yellen and Federal Reserve Chairman Jerome Powell would have us believe. But as Peter explained in a recent podcast, it’s not just the banking system that’s messed up. The Fed has screwed up everything that is a function of interest rates by keeping rates at zero for so long. Read More
05.03.23- Fed’s Looking in Wrong Direction
What’s the situation with the economy? The short answer is not good. Here’s why…
There are literally hundreds of economic indicators either as hard data or sentiment surveys released daily. It’s impossible for any analyst to keep up with all of them. Read More
05.02.23- The US Dollar is Finished
Are You Ready for High Inflation and Collapsing Living Standards?
US power since World War II has been based on its financial dominance stemming from the dollar being the reserve currency held by central banks in place of gold. As the dollar was the currency used to settle international trade accounts, every country needed dollars. That ensured a large demand for dollars to absorb the supply of dollars from the growing US budget and trade deficits. Read More
First Republic, is this you?
The Federal Reserve’s balance sheet, released today, dropped another $30 billion for the week, to $8.56 trillion, bringing the plunge in the five weeks since peak bank bailout to $171 billion, as quantitative tightening (QT) continued at the normal pace and liquidity support shifts and unwinds, though First Republic seems to be sucking hard on the Fed’s teat. Read More
According to this week’s Commerce Department report, U.S. GDP increased at an annualized rate of 1.1 percent during Q1 2023. The experts thought GDP would grow by 2 percent. They were wrong.
By now, it’s very well possible GDP has already slipped into reverse. We won’t know until the Commerce Department’s Q2 report is released in late July. In the interim, there’s an important question to be asked:
Is a recession bullish or bearish for stocks? Read More
We are nearing the time in early summer when the entertainment industry rolls out its new blockbusters and flops. June is also that time when the Fed had said it will roll-out its own special feature (and likely future flop) — the platform that will be used as part of its eventual central bank digital currency (CBDC).
The Fed is about to introduce a system that allows immediate processing of transactions between banks to take away whatever float you thought you might have had left between the time when you ran your debit card or wrote a check to the time it cleared the bank. Read More
I think we need to thank Joe Biden. Really, I do! And the reason why is he’s nominating people for important federal positions and the federal judiciary that are absolutely unqualified, and in many cases, to put it kindly, strange, and the Democrats are approving them. He hired Sam Brinton, and the left thinks you’re the problem:
“The rest of us all wondered what kind of vetting process was involved when this person was identified as the most qualified individual to oversee America’s nuclear policies. “BIGOT!” they screamed at us when we gave the natural side-eye to this obviously disturbed individual.” Read More
Right now, financial institutions all over America are getting really tight with their money. That means that less credit will be available for consumers and businesses, and that will mean less economic activity in the months ahead. When economic activity slows down, more businesses fail, more layoffs happen, and more consumers start defaulting on their debts. Of course if economic conditions steadily deteriorate it will cause financial institutions to get even more stingy with their money. It appears that a vicious cycle has now started, and I believe that this will be one of the biggest stories of the next 6 months. Read More
The Federal Reserve's quantitative tightening measures could take trillions of dollars from the banking system and intensify a credit squeeze, Fitch Ratings said Friday.
"System-wide banking liquidity indicators are still robust, but our projection is for reserves to fall significantly by USD900 billion to USD2.5 trillion by year-end," the ratings agency said. Read More
Former Federal Reserve Chair and current Treaury Secretary Janet “The Evil Hobbit” Yellen has created numerous catestrophic messes thanks to Fed policy errors, both at The Fed and now as Treasury Secretary.
For example, the massive almost hysterical overreaction of The Fed under Powell (following Yellen’s Reign of Error) to the Covid economic shutdowns resulted in a massive surge in M2 Money growth [green line]. Read More
04.21.23- How Quickly Will the Dollar Collapse?
This article looks at the factors behind the growing rejection of the dollar for trade settlement purposes by non-aligned nations around the world. They no longer fear political or economic reprisals from America.
The dollar’s monopoly was notably challenged by Saudi Arabia, which removed itself from the US’s sphere of influence to that of China and Russia. Consequently, peace has broken out throughout the Arab lands. Read More
Greetings from a lovely Northern Italy!
First, last week’s piece on financial formulas received fantastic feedback. I’m grateful.
I won’t do financial mathematics every week, but the feedback gave me a clue to dial it back a bit.
So I’ll try to keep things as simple as possible so you can protect yourselves from what’s eventually coming. Read More
04.19.23- The Fed Is Bankrupt
"The Fed has experienced significant operating losses over the last six months, which have exhausted its existing capital."
Federal Reserve Chair Jerome Powell recently testified before Congress on the current state of the US economy. In addition to monetary policy, Powell was questioned about the Fed’s regulatory proposals regarding cryptocurrencies and climate-related financial risks. Read More
04.18.23- Christine Lagarde Made 10 Key Points Today and I Agree With All of Them.
Central Banks in a Fragmenting World
Please consider a speech by Christine Lagarde, President of the ECB, on Central Banks in a Fragmenting World
04.17.23- The Fed Is Bankrupt
Federal Reserve Chair Jerome Powell recently testified before Congress on the current state of the US economy. In addition to monetary policy, Powell was questioned about the Fed’s regulatory proposals regarding cryptocurrencies and climate-related financial risks.
Barely mentioned, however, was the Fed’s balance sheet. The Fed has experienced significant operating losses over the last six months, which have exhausted its existing capital. Those losses represent foregone revenue to the US Treasury. Read More
04.15.23- Slavery in America Was Resurrected in 1913
Just as Jews claim exclusivity as holocaust victims of WW II despite that more Germans died and many times more Russians died and it was a holocaust experience for a number of ethnicities, black Americans claim to be the only victims of slavery despite the historical fact that all races have been enslaved usually by their own kind. Black slavery, for example originated in slave wars between African tribes. Read More
Fed minutes show just how out of touch the eggheads are
The Fed minutes were published for all to see (in my case, ignore until this morning). Step right up, grab some cotton candy and listen as the Federal reserve, which is raising the funds rate in order to try to contain and repel the inflation it created in 2020 through willful and steroidally aggressive policy, regales you with official version of the reasoning for a coming recession. Read More
04.13.23- Just How High Are Interest Rates?
Inflation cooled in March as the Federal Reserve’s interest rate increases showed more impact, the Labor Department reported Wednesday.
The consumer price index, a widely followed measure of the costs for goods and services in the U.S. economy, rose 0.1% for the month against a Dow Jones estimate for 0.2%, and 5% from a year ago versus the estimate of 5.1%. Read More
04.12.23- Damn You All!
If this were a war we would be mobilizing our forces to deny the implementation of a Central Bank Digital Currency (CBDC), or, at a minimum, require any such currency to be accompanied by an alternative cash currency option backed by gold, silver or other precious metal, perhaps a metal commodity of an equal value of one or more metals held in reserve. Read More
The people of any country desiring to be prosperous and free, must be cognizant of their past history, traditions, and legitimate strengths and weaknesses, so that the pitfalls of cultural declination leading to societal failure can be avoided. History is replete with failed empires and civilizations. In fact, most all have failed, and with the seemingly imminent death of America and the West, virtually every civilization to date will have succumbed to its own greed, immorality, mass division, dependence on State, and complete lack of courage in the face of adversity and accepted tyranny. This is the way of humanity, but does it have to be so? Read More
04.10.23- “No Way Out” for Global Markets Trapped in a Doom Loop of Debt
With egg prices still high, the potato industry is looking to scramble up Easter traditions with a budget-friendly alternative: Easter potatoes.
Why it matters: Potato producers are taking advantage of the fact that the price of eggs was up 55.4% in February compared to a year earlier while potato prices only increased 13.5% year over year, according to the latest Consumer Price Index. Read More
04.07.23- Texas Bill Would Create State-Issued Gold-Backed Digital Currency
Bills introduced in the Texas House and Senate would create a state-issued, gold-backed digital currency.
Enactment of this legislation would create an option for people to transact business in sound money, set the stage to undermine the Federal Reserve’s monopoly on money and create a viable alternative to a central bank digital currency (CBDC). Read More
04.06.23- Why the Fed must pivot
According to the Institute of International Finance (IIF), the value of global debt was slightly below $300 trillion in 2022. The world debt to GDP ratio fell last year but it is still above pre-pandemic levels.
The US debt to GDP ratio in 1982 was around 35%. Today it is more than three times higher, at 120%. Read More
Thanks to Yellen’s catestrophic Too-Low-For-Too-Long (TLFTL) and insane Federal spending, we are seeing the aftermath of The Fed trying to fight inflation. A fire sale of failed bank assets!! Read More
04.04.23- Can Civilization Survive without Sound Money?
As long as states are around, money will never be sound. But first, some clarity.
Sound money, per Ludwig von Mises, has two aspects: It serves as a commonly accepted medium of exchange, while also making it difficult for governments to meddle with it. We can see immediately that sound money is nowhere to be found in today’s world. All the current rhetoric about banks and their systemic risks are about money that’s subject to political expediency, the kind that brings civilization to its knees. Read More
04.03.23- China Accelerates
04.01.23- The Fed Knew
Should we leave the creation of new money in the hands of bankers or place its creation solely with our government?
03.31.23- Please Send Powell This Article
Here you have the central defect of the monetary and fiscal authorities who presently afflict us:
There we cite Mr. Lance Roberts of Real Financial Advice. More from whom: Read More
A textbook case of mismanagement
“A textbook case of mismanagement” is how the Fed Vice Chair responsible for bank supervision is going to describe SVB when he testifies to Congress today. He will also stress the Fed is prepared to use “all of our tools for any size institution, as needed, to keep the system safe and sound.” Read More
US futures are flat with bond yields reversing an overnight drop, lifted by the belly of the curve; the USD weaker for 8 of the past 9 days, and commodities mostly higher as investors shift their focus back to concerns about inflation and potential further monetary tightening from the recent banking-industry chaos; after all, a bank hasn't failed in at least a few days. WTI has soared 5.6% this week. Read More
03.27.23- Is This the Tipping Point?
After almost 15 years of Fed-fueled cheap money offered at near-zero rates that was leveraged into overinflated speculative bubbles, the lights are on, the crowd is dispersing – and the party might finally be over.
At an actual party, it’s easy to know when it’s time to say your goodbyes. The hosts turn the music off, start looking at their watches and taking away the snacks. Read More
03.25.23- Incompetent Federal Reserve Goofs Again
The Federal Reserve decided it had not wiped out enough banks and again raised interest rates, thereby pushing more banks toward insolvency.
The goofs think, or pretend to think, that too many Americans are working, making and spending too much money, and causing inflation despite the obvious fact that the rise in prices is due to the lockdowns and sanctions which busted up supply chains and reduced supply. Read More
03.24.23- Why the Fed Keeps Getting It Wrong
The market’s in a highly unstable state right now. These violent swings show the inadequacy of the standard models that the Fed and other mainstream analysts use.
The Fed assumes so many things about markets that are simply false, like that markets are always efficient, for example. They’re not. Under volatile conditions like these they gap up and down — they don’t move in rational, predictable increments like the “efficient-market hypothesis” supposes. Read More
A Federal Reserve white paper has come up with a new function for money. Let's tune in...
Docket No. OP - 1670
03.22.23- It Turns Out That Hundreds of Banks Are at Risk
It’s the weekend, but our fresh Financial Crisis does not sleep. And a recent study says we’ve only seen the tip of the iceberg.
The Washington Post wrote: “If banks were suddenly forced to liquidate their bond and loan portfolios, the losses would erase up to 91 percent of their combined capital cushion.” In other words, we were already right up against the edge. Read More
Over 100 of the world’s governments are planning to push central bank digital currencies (CBDCs) and the collapse of Silicon Valley Bank may have given them the perfect opportunity to introduce this nightmarish surveillance tech.
(Article by Tom Parker republished from ReclaimTheNet.org)
The heightened fear of bank runs and the growing calls for more government controls to prevent another Silicon Valley Bank-style event has created space for governments to swoop in and present CBDCs as the solution. Read More
Why would you throw-in the towel now? We are referring to the Fed’s belated battle against inflation, which evidences few signs of having been successful.
Yet that’s what the entitled herd on Wall Street is loudly demanding. As usual, they want the stock indexes to start going back up after an extended drought and are using the purported “financial crisis” among smaller banks as the pretext. Read More
Silicon Valley Bank is yet another example of corruption in the banking sector. I’ve read that SVB is the second largest banking failure in US history.
A woke and ‘green’ bank, SVB was devoted to ‘DIE,’ or Diversity, Inclusion, and Equity.
Maybe the latter in particular contributed to their collapse, but before it did go bust executives running the sorry show made sure they cashed out of their stock and rewarded all the top executives with generous bonuses. The taxpayers will pick up the rest of the tab via FDIC insurance… Read More
03.17.23- The Federal Reserve Is the Root Cause of the Banking Crisis
The Justice Department has announced it is investigating the banking crisis. It will undoubtedly charge that banking officials are responsible for the crisis. One thing is for sure: It will not indict the Federal Reserve System, which is the root cause of the crisis. In fact, in its search for scapegoats, it will not even acknowledge the Fed’s role in the crisis. That’s because the Fed plays a sacrosanct role in America’s welfare-warfare state, and every federal official knows that. Read More
Ellen Brown’s analysis of derivatives is one of the most intelligent articles we’ve read about the financial system since banks started blowing up. She’s nailed the biggest risk. From Brown at unz.com:
On Friday, March 10, Silicon Valley Bank (SVB) collapsed and was taken over by federal regulators. SVB was the 16th largest bank in the country and its bankruptcy was the second largest in U.S. history, following Washington Mutual in 2008. Despite its size, SVB was not a “systemically important financial institution” as defined in the Dodd-Frank Act, which requires insolvent SIFIs to “bail in” the money of their creditors to recapitalize themselves. Read More
03.15.23- How The Fed Broke The Banks
The Fed's anti-inflation measures had to hurt someone...
The Federal Reserve is in the unenviable position of achieving its mandate by crashing the economy. It's not something it wants to do, as Fed Chair Jerome Powell meekly admitted in his exchange with Sen. Elizabeth Warren (D–Mass.) last week. But it's something that happens as an unavoidable outcome of slowing down an economy littered with excess money and inflation. Broad money growth has been negative since late November, and interest rate expenses on everything from corporate borrowing to credit cards to the government's own debt have been rising fast. Read More
03.14.23- The Cover-up Begins
The disinformation service, Bloomberg, takes the lead. Bloomberg points its finger at Donald Trump and “Trump era deregulation.” In Bloomberg’s rewriting of history, Trump is responsible because he signed a bill passed by Democrats and Republicans that allowed mid-sized banks to “skirt some of the strictest post-financial crisis regulations.” So, where was the federal reserve? Where were the bank regulators? Bloomberg doesn’t say.
Presidents don’t write financial legislation. Financial legislation that the Federal Reserve and the SEC don’t approve doesn’t get passed. A third world immigrant-invader, Ro Khanna, who somehow represents in Congress Silicon Valley says: “Congress must come together to reverse the deregulation policies that were put in place under Trump.” Read More
03.13.23- We Are All Counterfeiters Now
Intellectuals and politicians often try to verbally summarize or justify conventional thinking in pithy ways. Milton Friedman (in 1965) and Richard Nixon (in 1971) both said different versions of the phrase “we are all Keynesians now.” . . . Friedman and Nixon were describing the thoughts behind the implementation of Great Society redistribution programs and an inflationary monetary policy designed to offset the cost of those programs.
—Brian Wesbury and Robert Stein Read More
In his testimony to Congress earlier this week, Federal Reserve chair Jay Powell indicated “the ultimate level of interest rates is likely to be higher than previously anticipated” and “restoring price stability will probably require that we maintain a restrictive stance for some time”. This was the tough Fed on display, and markets accordingly tanked. Yet a few weeks earlier, Powell had set the financial markets off to the races when he said, “We can now say, for the first time, the disinflationary process has started.” Read More
Central bank digital currency (CBDC) will end human freedom. Don’t fall for the assurances of safeguards, the promises of anonymity and of data protection. They are all deceptions and diversions to obscure the malevolent intent behind the global rollout of CBDC.
Central Bank Digital Currency is the most comprehensive, far-reaching, authoritarian social control mechanism ever devised. Its “interoperability” will enable the CBDCs issued by various national central banks to be networked to form one, centralised global CBDC surveillance and control system. Read More
03.09.23- Odds Are Rising That The Fed Will Trigger The Next Bust
From March 17, 2022, to the end of January 2023, the US Federal Reserve (Fed) increased its federal funds rate from practically zero to 4.50–4.75 percent. The rise in lending rates came in response to skyrocketing consumer goods price inflation: US inflation rose from 2.5 percent in January 2022 to 9.1 percent in June. Notwithstanding inflation falling to 6.4 percent in January 2023, the Fed continues to signal to markets that it will continue to hike rates to bring down consumer price inflation. Read More
The big question facing the Fed is whether they should increase the Fed Funds rate by 25bps or 50bps on March 22, 2023. If Jerome Powell cared for our advice, we would tell him to take the opposite approach of President Theodore Roosevelt. Speak loudly because your stick isn’t that big anymore. Read More
How much of policy tightening is too much? With the major central banks around the world already having raised their benchmark rates by the most in decades, it’s natural that the question is being asked.
In fact, it seems that it was a point of discussion at the European Central Bank’s meeting last month, though such concerns were considered premature. When interest rates go from being the most accommodative they have perhaps ever been to a regime where they need to curb the worst bout of inflation in decades, central banks have to make up for lost time. Read More
03.06.23- Interest rates: The silent killer
Central banks were happy to suppress interest rates, even into negative territory, so long as the heavily managed consumer price inflation statistic was rising at an annualised rate of two per cent or so. But the expansion of credit during the covid pandemic changed that, with prices subsequently leaping above the two per cent target. The new price trend first became evident in mid-2020 in both producer and consumer prices. And when NATO decided to respond to the Russian invasion of Ukraine a year ago by cutting off this major energy and commodity supplier from global markets, prices soared, and interest rate suppression policies backfired. Read More
03.04.23- Is the Golden Age Of 2% Inflation Over?
Despite the Fed’s best efforts thus far to raise rates and cool off inflation, I don’t expect relief any time soon.
With that in mind, let’s look into the past to see what a longer period of inflation looks like.
The best place to start in the U.S. is to take a brief look at an extraordinarily long period of inflation that took place from the 1970s to the early 1980s. We don’t have to examine every detail, which would take hours, but this summary will suffice: Read More
The court of public opinion
Years ago, the start of quantitative easing caused a backlash over concerns that the central banks were prioritizing the asset-rich over the average Joe. It raised questions about mandates and the independence of the monetary authority, particularly in Europe where the ECB was the only actor to prevent a fragmentation of the Eurozone. And it even raised questions of ethics, after some of the FOMC members’ trading activitiescame to light. Read More
03.01.23- The Forces Upending The Global Economy Cannot Be Reversed
So sorry, but the lifestyle of low-cost credit and all the goodies it could buy is permanently out of stock.
In focusing on geopolitics, we lose sight of the dependence of every economy on a functioning global economy of low-cost goods, services, materials, shipping, transport, capital, labor and financial instruments, all flowing freely across borders and around the world. Read More
02.27.23- Kamikaze Strategies
It’s a bad market strategy to stick to a fundamental view while ignoring a price trend the other way: it’s a kamikaze strategy when that fundamental view doesn’t capture reality.
In 2021, inflation was not going to happen: then it rose sharply, but was called “transitory”. In 2022, inflation was not going to soar, nor rates rise: then it did, and rates rose. Read More
Below we examine the historical interplay of losing wars, cornered egos, tanking currencies, greater controls and gold’s loyalty in times of open madness.
Despite the fact that universities even in the Land of Lincoln have had a say in cancelling Abraham Lincoln (good grief…) for apparently not being “woke” enough circa 1861 to be as wise as the neo-liberal faculties of 2023, I’d still make a case that history matters, and by this, I mean all its wonderful and ugly nuances (and lessons), whether they offend modern sensibilities or not. Read More
In the recent era of what feels like endless inflation, we keep hoping for something that would cool it off.
In fairness, the Federal Reserve led by Jerome Powell has been raising rates slowly after each meeting (even though they started later than they should’ve). The result of that approach has cooled inflation over the last six months, from 4.5 times over the Fed’s target 2% rate to just 3.2 times higher. Read More
02.23.23- Will 7% Mortgages Crush Housing?
Between 2020 and 2022 houses in America’s hottest real estate markets went from unaffordable to 50% above unaffordable. Put another way, they did what would have been impossible in an economy where market forces determined interest rates and home prices.
But ours was not that kind of market. Central banks around the world had lost their collective minds and money was the cheapest it had ever been - far cheaper than it should or would be in a sane world. Offered 2.75% 30-year mortgages (read, shockingly low monthly payments), home buyers stampeded off the proverbial cliff en masse, paying any price, accepting any terms (no inspection, no problem!) to get houses in hot markets. Read More
A four-month decline in mortgage yields may be over. Let's discuss what this means to the home buyer and how the Fed has messed with people's lives over time. Read More
“A great landing in one when you can fly the plane the following day..”
The market is talking about a no-landing scenario – but should be watching what Central Banks are saying, and China’s position re Ukraine. The market remains vulnerable to recession and rising geopolitical tensions. They are very closely linked. Read More
Well, here we are again. Back to 2007 and the housing bubble and subsequent financial crisis. The US Treasury 6-month yield is back over 5%, a yield we haven’t seen since August 8, 2007.
Well, there is one notable difference. The Fed’s balance sheet is still at $8.4 TRILLION whereas it was only $866 billion on August 8, 2007. Read More
On Thursday afternoon, Federal Reserve Bank of Cleveland President Loretta Mester remarked that she saw a compelling case for a bigger increase earlier this month when policymakers met. Not much later in the day, her colleague James Bullard commented that he would not rule out supporting a 50-basis point hike at the March meeting. Read More
Central banks have been buying gold in quantities not seen since 1967. After decades of efforts to demonetize gold, why would the guardians of the monetary system suddenly invest large sums into a metal that demands crippling mining costs and offers little return? The answer is not so simple. Read More
International Man: Recently, there have been whispers about the Fed raising its official inflation target above 2%.
But before we get into that, we should define our terms.
What is the proper way to think of inflation and the Fed itself? Read More
When most of the market was saying “transitory!” this Daily was among the first to float the idea that inflation and rates risked being “higher for longer”. This was considered a ‘colorful’, counter-consensus view: like Russia invading Ukraine; or a US-China Cold War in 2017; or Trump winning the 2016 election. Yet Valentine’s Day saw a slew of Fed speakers say higher for longer in so many words; and the market --finally-- shifted its rate projections up to the most dovish end of the Fed’s dot plot, at least until 2024, while starting to price in the odds of rates rising in June rather than being close to the start of a series of falls. Read More
02.14.23- Bond Market a Tad Antsy about Inflation Not Just Vanishing? One-Year Yield Nears 5%. Mortgage Rates Back at 6.5%
02.13.23- Unidentified Flying Inflation
A Chinese balloon was shot down over the US early last week. An unidentified flying object was shot down on Friday over Alaska; another over Canada on Saturday; Montana airspace was briefly closed on Sunday for related reasons; and yet another unidentified flying object was shot down during the Super Bowl. You want “we are not alone” speculation, you got it: CNN reports the US fighter pilots who shot down one of the objects could not identify any propulsion, and that it was just staying in the air at around 40,000 feet. So, a balloon(?): which can actually be effective war weapons according to some experts. You want Sputnik Cold War national security paranoia, you got it too. The alleged origin of these and other balloons, China, is about to shoot down a flying object over itsterritorial waters. Read More
“We don’t know, for example, who’s using a $100 bill today and we don’t know who’s using a $1000 peso bill today. The key difference with the CBCD the central bank will have absolute control on the rules and regulations that will determine the use of that expression of central bank liability, and also we will have the technology to enforce that.”
- Agustín Carstens–General Manager, Bank for International Settlements Read More
Balloons blow, and capital won’t flow. ‘US Makes Case That Chinese Balloon was Part of a Spying Program’, says Bloomberg, and “The Chinese spy balloon shot down Saturday included western components with English-language writing on them.” ‘US Aims to Curtail Financial Ties With China’, says the New York Times, with the White House preparing rules to restrict US dollars from flowing there. An inverse CFIUS would stop US investment in areas related to technologies like AI; or with dual civilian-military uses, which is a longer list; or balloons. Read More
02.09.23- Two Bears...
I get quite a lot of direct and indirect feedback to the Global Daily. Some of it is positive, some of it is negative - and a lot of that is downright unpleasant, and some of it is ‘eclectic’ - like a detailed analysis of the collapse of the economy of Atlantis. However, yesterday was the first time I was told I was “on cocaine” for arguing higher rates can, in some circumstances, lead to higher inflation. (For more on which, see here.) Read More
Central banks closed out 2022 with reported net purchases of 28 tons of gold in December. Including large unreported purchases, this brought total central bank gold buying in 2022 to 1,136 tons. It was the second-highest level of net purchases on record dating back to 1950, and the 13th straight year of net central bank gold purchases.
China officially started buying gold again in November and made another large purchase of 30 tons in December. That raised China’s total gold reserves to over 2,000 tons for the first time. Read More
Late last week, when looking at the most recent Senior Loan Officer Opinion Survey held by the Fed, we noted that the surge in revolving credit has not gone unnoticed by lenders: the on bank lending practices showed banks tightening lending standards for commercial, mortgage, and credit card loans.
As Bloomberg's Vincent Cignarella observed, "tighter credit likely will drive slower spending, a reduction in risk and the potential for the Fed to pivot sooner rather than later to avoid or shorten a potential recession. That would be more good news for bond bulls." Read More
For some time, I’ve been predicting the emergence of a “multi-reserve currency” world, a bit of a paradigm shift that the world has not really ever experienced as a permanent feature of its financial system for a very long time, centuries probably. To be sure, there were periods of exception to this coming paradigm shift, as when during a brief period between the World Wars both the British pound sterling and the US dollar both served as reserve currencies. But the period was more of an interlude period of the transition from the British pound to the American dollar. What I’m talking about is a world were multiple reserve currencies coexist as a relatively stable feature of the financial system for a prolonged period of time. Read More
Fiscal stimulus during the pandemic contributed to an increase in inflation of about 2.6 percentage points.
Stimulus spending played a "sizable role" in driving inflation to 40-year highs in the wake of the COVID-19 pandemic. Read More
QT is starting to make a visible dent.
The Federal Reserve has shed $532 billion in assets since the peak in April, with total assets falling to $8.43 trillion, the lowest since September 2021, according to the weekly balance sheet released today. Compared to the balance sheet a month ago (released January 5), total assets dropped by $74 billion.
Quantitative Tightening is starting to make a visible dent: Read More
02.02.23- Warning Shot Fired!
Another warning shot across the bow just happened…
I warned my readers a few weeks ago about how the Federal Reserve, in cooperation with giant global banks, has launched a 12-week pilot project to test the message systems and payment processes on the new CBDC dollar.
A pilot project is not research and development. That’s already done. The pilot means that what I call “Biden Bucks” are here, and the backers just want to test the plumbing before they roll the system out on the entire population. Read More
“We’re an empire now, and when we act, we create our own reality. And while you’re studying that reality — judiciously, as you will — we’ll act again, creating other new realities, which you can study too, and that’s how things will sort out. We’re history’s actors… and you, all of you, will be left to just study what we do.”
– Karl Rove Read More
The mainstream is optimistic about both the economy and the Fed’s fight against inflation. In his podcast, Peter Schiff took apart the mainstream narrative, explaining that the economy is much weaker than most people realize and the Fed is nowhere near victory in the war on inflation.
We’re seeing a Santa Claus rally in stock in January, especially in the speculative momentum stocks. We’ve also seen a rally in the bond market. Peter called it a dead cat bounce. Read More
Jan 30 (Reuters) - U.S. central bankers have unambiguously telegraphed this week's policy decision: a quarter-of-a-percentage-point increase in their benchmark interest rate, the smallest since they kicked off their tightening cycle 10 months ago with one the same size.
The world is groaning in every category, and it lacks a leader. Biden, Macron, Trudeau, et al, have all demonstrated behavior that resembles the Keystone Kops. So what’s ahead?
I hear from a lot of people! Here are some of the scenarios they see playing out in the near term. They can’t all be right, but here’s a brief run-down of what many suggest is ahead of us. You may disagree with one or all points, but millions of people believe one of the following scenarios will play out. Read More
01.27.23- The Biggest Collapse in M2 Money Supply Since the Great Depression
If your measure of inflation is money supply, then the economy is in a deflationary period right now.
M1 and M2 numbers are from the Fed, ODL is a derivative of M2, described below.
The decline of a currency’s world reserve status is often a long process rife with denials. There are numerous economic “experts” out there that have been dismissing any and all warnings of dollar collapse for years. They just don’t get it, or they don’t want to get it. The idea that the US currency could ever be dethroned as the defacto global trade mechanism is impossible in their minds. Read More
01.25.23- Gold’s Breakout: It’s Not the Inflation
Most assets have a poor record over the past year. Gold is one of the few assets that posted a gain — not a major gain, but a gain.
Gold has really taken off since late October, from below $1,630 to almost $1,930 today. That’s a major move. What’s going on?
You might want to argue that it has to do with inflation. The trouble with that argument is that (official) inflation has been coming down for the past few months. Meanwhile, gold seemed to massively underperform with respect to the very serious inflation we saw earlier last year. Read More
On March 2, 1629, after years of escalating tensions with his own government, King Charles I of England dissolved parliament and ordered all the politicians to go home.
He was only in the fourth year of his reign, but Charles was already a very unpopular king. One of his worst habits was frequently abusing his power and taking unilateral executive actions– raising taxes or passing new regulations– which would ordinarily require the approval of parliament. Read More
When people spend beyond their means, they increase the likelihood that they will suffer severe financial consequences – including foreclosure and bankruptcy.
But when the U.S. government spends beyond its income, that doesn’t happen. It’s a mistake to think about government spending the way we think about our own household spending. The primary difference is a concept known by economists as modern monetary theory (MMT): Read More
The emergence of money is a market phenomenon. By surrendering fewer marketable goods for more marketable goods, individuals move closer to the goods they ultimately wish to consume but cannot acquire through direct exchange. The most marketable goods become common media of exchange (i.e., money).
With money on one side of every transaction, the number of relevant prices is reduced, the division of labor expands, and specialization in the stages of production becomes possible. The basic function of money, then, is to facilitate exchange. Contrary to this purpose, the substitution of national paper currencies for commodity money has made trade more difficult. Read More
This week, Your News to Know rounds up the latest top stories involving gold and the overall economy. Stories include: Is gold really underperforming?, more woes from COMEX and Austrian Mint discusses recent supply strains.
No Fed U-turn means gold will disappoint… right?
Last week’s gold news was, for the most part, how the Federal Reserve didn’t U-turn. It’s sticking to its hawkish monetary-tightening policy with general expectations that it will continue to do so. The subsequent headlines are surprising. Read More
Those who know Wall Street lore sometimes recall that Fed chairman William Miller—Paul Volcker’s immediate predecessor—joked that most Americans believed the Federal Reserve was either an Indian reservation, a wildlife preserve, or a brand of whiskey. The Fed, of course, is none of those things, but there’s also one other thing the Federal Reserve is not: an actual bank. It is simply a government agency that does bank-like things. Read More
The average price of eggs increased by 49%, butter/margarine by 34% year-over-year, CNBC reported as of November. Yet, with his first speech of the year, Federal Reserve Chair Jerome Powell addressed the issue of the Fed’s independence. Yes, the conference was on Central Bank independence. But how many Americans have any concern, or the slightest care for this?
At a conference in Sweden, Powell made his case using an appeal to democracy:
With independence comes the responsibility to provide the transparency that enables effective oversight by Congress, which, in turn, supports the Fed's democratic legitimacy. Read More
It was all about the Fed – or was it? US policy rates rocketed higher last year, dominating broader market dynamics. That’s all you needed to know. But there were quiet outliers. Turkey was the top-performing equity market in US dollar terms – a surprise given the unexpectedly rapid Fed tightening. Stablecoin being stable in both price and assets was probably not on your bingo card under the digital-1929-crash column. Read More
The United States is lurching towards an epic financial catastrophe. This isn’t a novel insight. The great tragedy has been in the works for decades. Anyone with a mild inkling of curiosity knows what’s going on.
According to the U.S. Census Bureau’s population clock, the U.S. population is over 334 million. This, no doubt, is a lot of mouths to feed and people to clothe and shelter. But that’s not all. Read More
01.13.23- The Great Depression's Patsy
The culprit responsible for the Wall Street crash of 1929 and the Great Depression can be easily identified—the government.
To protect fractional reserve banking and generate a buyer for its debt, the US government created the Federal Reserve System in 1913 and put it in charge of the money supply. From July 1921 to July 1929, the Federal Reserve inflated the money supply by 62 percent, resulting in the crash in late October. The US government, following an aggressive “do something” program for the first time in American history, intervened in numerous ways throughout the 1930s—first under Herbert Hoover, then more heavily under Franklin D. Roosevelt. Read More
Based on the headline numbers, price inflation cooled again in December, boosting market optimism that the Federal Reserve will continue to ease off the pedal on its monetary tightening. But this could be setting the stage for more price inflation down the road.
And a deeper look at the data reveals that a lot of inflationary pressure remains despite the optimistic headlines. Read More
01.11.23- What if the "Black Swan" of 2023 Is the Fed Succeeds?
If the Fed succeeding is a "Black Swan," bring it on.
What if the "Black Swan" of 2023 is the Federal Reserve succeeds? Two stipulations here:
1. "Black Swan" is in quotes because the common usage has widened to include events that don't match Nassim Taleb's original criteria / definition of black swan; the term now includes events considered unlikely or that are off the radar screens of both the media and the alt-media. Read More
Now, if this chart showed the stock price of a company, would you want to invest in it?
If it’s the price of a commodity, would you be a buyer? Read More
01.09.23- Has the Federal Reserve
01.07.23- How FedGov Destroyed
There is no real housing market in the US. Instead, an unholy trinity of Fannie/Freddie, the US Treasury, and the Federal Reserve Bank operate to distort the market at every turn and drive home prices up dramatically. Mises Institute Senior Fellow Alex Pollock, an economist and former mortgage banker, joins Jeff to describe the reality few Americans know. Read More
01.06.23- Why the Threat of Deflation is Real
I know — inflation has been grabbing all the headlines for a good while now — so you may wonder why the subject of deflation is relevant.
First, the definitions of inflation and deflation go beyond commonly accepted meanings.
As Robert Prechter’s Last Chance to Conquer the Crash says:
Inflation is an increase in the total amount of money and credit, and deflation is a decrease in the total amount of money and credit. … Read More
As the Federal Reserve continues its fastest rate hike cycle since the stagflation crisis of 1980, a couple vital questions linger in the minds of economists everywhere:
When is recession going to strike?
When will the Fed reverse course on tightening? Read More
One of the most dishonest games being played in economics today is the attempt by various groups (political and financial) to deflect blame for the rise of inflation. The Biden White House and Democrats desperately want to blame Russia and the war in Ukraine, even though inflation was spiking long before the war ever started. The Federal Reserve pretended for years that inflation was not a threat at all despite numerous alternative economists warning what would happen. Read More
01.03.23- The Fed needs to jack rates up
This is nuts, we thought there was a crash?If you thought that the Federal Reserve’s interest rate hikes and the Nasdaq’s subsequent 33 per cent puke in 2022 were enough to finally kill the tragicomically engorged late-stage private market tech bubble . . . Read More
01.02.23- Is QE returning by stealth?
While the Fed is reducing its bond-buying programme, it is still providing stimulus via other means
It has been a bleak year for many investors. Global investors have lost $23tn of wealth in housing and financial assets so far in 2022, according to my estimates. That is equivalent to 22 per cent of global gross domestic product and uncomfortably exceeds the lesser $18tn of losses suffered in the 2008 financial crisis. Read More