Tag - Fiat

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Thursday, December 29 2016

It's The Dollar, Stupid!

We think the markets have it fundamentally wrong. US investors are anticipating a cyclical shift towards economic expansion via new tax incentives, business de-regulation and Keynesian government spending that promise to increase output, demand and asset prices. However, there is a far more influential driver of future asset prices – a structural shift that has begun but has yet to be acknowledged by economic and political authorities, and, judging by financial asset markets, by most investors. We expect weak equity markets and a strong treasury market beginning in 2017.

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Saturday, December 17 2016

Debt Nation: The Problem, the Solutions

The world is drowning in debt—$152 trillion, or 225 percent of the world’s GDP, according to the International Monetary Fund. In the United States, total debt (including government and private) exceeds $62.5 trillion, or 334 percent of GDP, according to current Federal Reserve data—that’s $196,000 for every man, woman, and child in this country.

Debt itself isn’t a problem, if it’s spent and invested wisely. But rising debt-to-GDP ratios mean the debt hasn’t led to increases in output, so it cannot be paid down. If debt is not productive, it constrains economic activity, which is one of the reasons the recovery since the Great Recession has been the weakest on record.

Historically, debt levels of this magnitude have never been paid back in real terms. They were reduced through default or inflation, with sometimes devastating results. This time around, however, creative economists say there are ways to reduce the debt burden without disrupting the economy too much.

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Wednesday, November 16 2016

Dollar at highest since 2003

The U.S. dollar index touched a near 14-year high on Wednesday

The dollar has surged in the past week, tracking Treasury yields higher on the expectation that increased U.S government spending could trigger higher inflation and force the Federal Reserve to tighten monetary policy more quickly than expected.

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Thursday, November 10 2016

India's shock bank note ban sparks cash chaos

Indians struggled to pay for basics goods like food and fuel on Wednesday and fretted about their savings, after the government withdrew 500 and 1,000 rupee notes from circulation in a bid to flush out money hidden from the tax man.

New bills of 500 and 2,000 rupees will be introduced from Nov. 10. Jaitley said it would take two to three weeks to replace the old notes, amid concerns over the availability of cash.

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Tuesday, November 8 2016

Government currency strike to push many to gold

The jewellery industry on Tuesday welcomed the government's decision to ban old Rs 500 and Rs 1,000 notes, saying gold demand will rise as people will have more faith in the precious metal than the currency notes.

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Friday, October 7 2016

Algos, Barriers, Rumors: Some Theories On What Caused The Pound Flash Crash

As reported moments ago, just around 7:07pm ET, cable snapped and plunged by what some say may have been as much as 1200 pips, dropping from 1.26 to as low as 1.14 according to some brokers, before snapping back up.

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Thursday, October 6 2016

The IMF Sounds An Alarm As Global Debt Hits A Record $152 Trillion Or 225% Of World GDP

At 225 percent of world GDP, the global debt of the nonfinancial sector, comprising the general government, households, and nonfinancial firms, is currently at an all-time high of $152 trillion.

Add financial debt and you will need a far bigger chart.

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Thursday, September 29 2016

How Much Money Have Humans Created?

The dollar amounts are so staggering, that simply telling you how much money humans have created probably wouldn’t convey the magnitude.

However, by using data visualization in this video, we can relate numbers in the millions, billions, and trillions to create the context to make it more understandable.

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Sunday, September 11 2016

Infographic: Visualizing the Size of the U.S. National Debt

The U.S. national debt is one of those numbers. It currently sits at $19.5 trillion, which is actually such a large number that it is truly difficult for the average person to comprehend. How big is the U.S. National Debt?

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Tuesday, August 30 2016

Germans "Lose Faith In Banks", Rush To Buy Safes

First it was the news that Raiffeisen Gmund am Tegernsee, a German cooperative savings bank in the Bavarian village of Gmund am Tegernsee, with a population 5,767, finally gave in to the ECB's monetary repression, and announced it’ll start charging retail customers to hold their cash. Then, just last week, Deutsche Bank's CEO came about as close to shouting fire in a crowded negative rate theater, when, in a Handelsblatt Op-Ed, he warned of "fatal consequences" for savers in Germany and Europe - to be sure, being the CEO of the world's most systemically risky bank did not help his cause.

That was the last straw, and having been patient long enough, the German public has started to move. According to the WSJ, German savers are leaving the "security of savings banks" for what many now consider an even safer place to park their cash: home safes.

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Wednesday, August 17 2016

Today in 1971: President Nixon Closes the Gold Window

45 years ago today, on August 15, 1971, President Richard Nixon officially closed the gold window. While US citizens had been forbidden from owning gold or from redeeming their gold certificates for gold coins since the early 1930s, foreign governments still had the privilege of redeeming their dollars for gold. Due to the Federal Reserve’s inflationary monetary policy during the 1960s, foreign governments began to redeem more and more dollars for gold. Attempts to encourage other governments (especially France) not to redeem their dollar holdings were unsuccessful, and there was a very real threat that US gold holdings might eventually be exhausted. So President Nixon decided to close the gold window, thus severing the final link between the US dollar and gold. The removal of the restraint of gold redemption freed the Federal Reserve to engage in more inflationary monetary policy than ever. The effects of that on money supply and official price inflation figures are readily apparent.

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Monday, August 15 2016

Lord Rothschild: Why I've sold hundreds of millions of pounds worth of shares, and bought gold

Central bankers continuing what is surely the greatest experiment in monetary policy in the history of the world. We are therefore in uncharted waters and it is impossible to predict the unintended consequences of very low interest rates, with some 30 per cent of global government debt at negative yields, combined with quantitative easing on a massive scale.

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Sunday, August 14 2016

A Stunning Admission From Deutsche Bank Why A Shock Is Needed To Collapse The Market, And Force A Real Panic

As Konstam puts it, "the status quo could continue for several years yet – if nothing “breaks” in the system" but "without an external economic shock it is hard to see policymakers being prepared to take dramatic, fiscal action to jumpstart the global economy and bounce it out of a financial repression defined by low and falling real yields to one that at least initially is defined by rising nominal yields through higher inflation expectations."

As for the conclusion, or why a financial shock is long overdue, Konstam says that "ironically the shock that is needed would require a collapse in risk assets for policymakers to then really panic and attempt dramatic fiscal stimulus. "

This is critical - and inevitable - as only a shock can lead to an "unwind of the falling yield/rising equity market where all financial assets trade badly."

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Thursday, August 11 2016

Central bankers are steering world towards Soviet-style collapse, economist warns

Our financial system ... feels like we are living in the Matrix,” he writes.

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Friday, August 5 2016

If You Want To Know The Real Rate Of Inflation, Don't Bother With The CPI

Why real rates matter & gold is rising..

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Friday, July 29 2016

IMF admits disastrous love affair with the euro, apologises for the immolation of Greece

The International Monetary Fund’s top staff misled their own board, made a series of calamitous misjudgments in Greece, became euphoric cheerleaders for the euro project, ignored warning signs of impending crisis, and collectively failed to grasp an elemental concept of currency theory.

This is the lacerating verdict of the IMF’s top watchdog on the Fund’s tangled political role in the eurozone debt crisis, the most damaging episode in the history of the Bretton Woods institutions.

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Central bank digital currency: the end of monetary policy as we know it?

Central banks (CBs) have long issued paper currency. The development of Bitcoin and other private digital currencies has provided them with the technological means to issue their own digital currency. But should they?

Addressing this question is part of the Bank’s Research Agenda. In this post I sketch out how a CB digital currency – call it CBcoin – might affect the monetary and banking systems – setting aside other important and complex systemic implications that range from prudential regulation and financial stability to technology, operational and financial conduct.

I argue that taken to its most extreme conclusion, CBcoin issuance could have far-reaching consequences for commercial and central banking – divorcing payments from private bank deposits and even putting an end to banks’ ability to create money. By redefining the architecture of payment systems, CBcoin could thus challenge fractional reserve banking and reshape the conduct of monetary policy.

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Thursday, July 28 2016

If Helicopter Money Succeeds, It Will Lead To 1,500% Inflation

Eventually the private sector will complete its balance sheet repairs and resume borrowing. When that happens, inflation can quickly spiral out of control unless the central bank drains the liquidity it pumped into the market under quantitative easing or helicopter money. For example, excess reserves created by the Fed currently amount to some 15 times the level of statutory reserves.

That implies that if businesses and households were to resume borrowing in earnest, the US money supply could balloon to 15 times its current size, sending inflation as high as 1,500%. The corresponding ratios are 28 times for Japan and Switzerland, five times for the eurozone, and 11 times for the UK.

Once private-sector demand for loans recovers in these countries, confidence in the dollar, euro, and yen will plummet unless the Fed reduces excess reserves to one-fifteenth of their current level, the ECB to one-fifth, and the Bank of Japan to one-twenty-eighth.

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Tuesday, July 26 2016

NatWest paves way for introduction of negative interest rates

A major high street bank has paved the way for the introduction of negative interest rates for the first time in Britain by warning customers it may have to charge them to accept deposits.

The warning by NatWest was made in a letter changing the terms and conditions for the bank’s 850,000 business customers, which range from self-employed traders, charities and clubs to big corporations.

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Saturday, July 23 2016

Gold's $9.2 Trillion Tailwind

One of the biggest challenges for gold as an investment is that, like cash, it doesn't really generate income.

When there are bonds and stocks out there that offer interest and dividend yields to offset the risk of any fall in capital values, why choose a shiny metal that's a pure punt on price movements?

Well, about those yields:

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