Tuesday, January 31 2017
By GCRU Gold News on Tuesday, January 31 2017, 02:59
When we had a problem in 1987 – some of you may be old enough, long enough in the business to remember that, – the answer was, ‘print the money’. And when we had a problem in 1990 and 1991, the answer was, ‘print the money’. And when we had the difficulties in South East Asia and LTCM in 1997 and 1998, the answer was, ‘print the money’. And in 2001, when the economy tanked, the answer was, ‘print the money’. I think that has given money, and the associated increase in credit and debt, a ver y important and dangerous role which it is playing out even as we speak.
Tuesday, January 17 2017
By GCRU Gold News on Tuesday, January 17 2017, 01:35
The world entered a credit-expansion binge in 1971. The US, as the world's central banker (liberated from the restriction of redeeming dollars for gold) entered upon a long credit expansion that fed dollars to the world in exchange for the world's products. The world responded to the incoming flow of dollars to its central banks, with a corresponding credit expansion which fostered a credit-based prosperity around the world.
The graph elaborated on the basis of Bloomberg data is telling us that the world reached the point where a general liquidation had to set in, in August 2014.
Thursday, December 29 2016
By GCRU Gold News on Thursday, December 29 2016, 10:54
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.
Saturday, December 17 2016
By GCRU Gold News on Saturday, December 17 2016, 00:28
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.
Wednesday, November 16 2016
By GCRU Gold News on Wednesday, November 16 2016, 22:44
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.
Thursday, November 10 2016
By GCRU Gold News on Thursday, November 10 2016, 06:11
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.
Tuesday, November 8 2016
By GCRU Gold News on Tuesday, November 8 2016, 21:41
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.
Friday, October 7 2016
By GCRU Gold News on Friday, October 7 2016, 02:00
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.
Thursday, October 6 2016
By GCRU Gold News on Thursday, October 6 2016, 00:46
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.
Thursday, September 29 2016
By GCRU Gold News on Thursday, September 29 2016, 05:01
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.
Sunday, September 11 2016
By GCRU Gold News on Sunday, September 11 2016, 07:36
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?
Tuesday, August 30 2016
By GCRU Gold News on Tuesday, August 30 2016, 07:05
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.
Wednesday, August 17 2016
By GCRU Gold News on Wednesday, August 17 2016, 00:40
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.
Monday, August 15 2016
By GCRU Gold News on Monday, August 15 2016, 23:33
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.
Sunday, August 14 2016
By GCRU Gold News on Sunday, August 14 2016, 01:11
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."
Thursday, August 11 2016
By GCRU Gold News on Thursday, August 11 2016, 13:49
“Our financial system ... feels like we are living in the Matrix,” he writes.
Friday, August 5 2016
By GCRU Gold News on Friday, August 5 2016, 11:54
Why real rates matter & gold is rising..
Friday, July 29 2016
By GCRU Gold News on Friday, July 29 2016, 04:51
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.
By GCRU Gold News on Friday, July 29 2016, 02:33
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.
Thursday, July 28 2016
By GCRU Gold News on Thursday, July 28 2016, 03:43
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.