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