Tag - Fiat

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Friday, July 29 2016

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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Friday, June 17 2016

Hints of FX intervention as central banks debate Brexit response

Warnings from officials in Japan and Switzerland on Thursday left financial markets wondering about what central banks are planning behind the scenes if Britain votes to leave the European Union next week.

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Saturday, June 11 2016

Here's why the collapse in global bond yields could cause a $1 trillion financial nightmare

When Bill Gross, on Thursday, called the huge pile of sovereign debt trading in negative territory a “supernova that will explode one day” on Twitter — people took notice.

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Tuesday, May 17 2016

The Death of the Euro

We are looking at a complete global financial meltdown of the world financial system.

The construct of the common European currency is no longer sustainable. A completely new monetary system will be introduced as early as 2018.

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Monday, May 16 2016

The Endgame

In short, growing evidence of price inflation and stagnant production can be expected to materially increase the risk of a global banking and currency meltdown. The best escape-route is ownership of anything other than purely financial assets and fiat currency deposits. No wonder the price of gold, which is the soundest of moneys, appears to have entered a new bull market.

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"The Global Negative Feedback Loop" - Why Investors Are Fleeing Capital Markets

The following comprehensive analysis of current market risks and concerns, represents one of the better summary assessments by both Brean Capital's Russ Certo as well as Bloomberg's market analysis team, of not only why there seems to be an increasingly more tangible sense of gloom covering global capital markets, but also why investors are increasingly withdrawing from risk, leaving central banks to duke it out among themselves.

And turning to gold...

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Wednesday, May 4 2016

The War On Paper Currency Officially Begins: ECB Ends Production Of EU500 Bill

Following the denial in February that this action is in any way about reducing cash, The ECB has made its decision on the EUR500 Bill:

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Sunday, March 20 2016

Central banks are already doing the unthinkable - you just don't know it

Faced with political intransigence, central bankers are openly talking about the previously unthinkable: "helicopter money".

A catch-all term, helicopter drops describe the process by which central banks can create money to transfer to the public or private sector to stimulate economic activity and spending.

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Wednesday, March 16 2016

US inflation rears its ugly head as global cycle nears danger zone

The trigger for the next global recession is at last coming into view after a series of loud distractions and false alarms.

The Atlanta Federal Reserve's gauge of "sticky-price" inflation in the US soared to a post-Lehman peak of 3pc in February. This index is a 'pure' measure of core inflation - the underlying story once the noise is stripped out.

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Thursday, March 10 2016

Central Banks Are About To Leave Fiat Addicted Stock Markets In Agony

Our current crisis, what the International Monetary Fund calls the “global economic reset,” has only just begun. Though sometimes we must read between the lines or connect a few dots, in most cases the banking elites tell us exactly what they are going to do before they do it. It’s time we start listening, stop buying into the day-to-day hype and hopes of false recovery, and prepare accordingly.

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Japanese Policy Failure Means Disaster For Us All

Forced out of their mysterious anonymity and highly technical orientation, central banks have been dramatically thrust into the limelight as they have become single-handedly responsible for the fate of the global economy. Responding to one emergency after the other, they have set aside their conventional approaches and instead evolved into serial policy experimenters.

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Thursday, February 18 2016

All of the world's stock exchanges by size

There are 60 major stock exchanges throughout the world, and their range of sizes is quite surprising.

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Saturday, February 13 2016

Is This Debt’s Last Rattle?

But if there’s one law in economics, it’s that when a bubble pops it always ends up below where it started. So look at where levels were before the bubble was blown, and then look out below.

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Monday, February 1 2016

Bring On the Cashless Future

I was never a gold bug. But if the "helpful suggestions" in this editorial come to pass, I'll be buying gold with both hands.

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Wednesday, January 20 2016

We Know How This Ends

As noted through this whole discussion, that “informal central bank cooperation” doesn’t really amount to anything. That lesson could be applied to the Bundesbank “selling dollars” in 1969, the PBOC “selling UST’s” in 2015 or the worthless, useless Federal Reserve RRP in 2016. They really don’t know what they are doing, they never have and it truly doesn’t matter fixed or floating. Adjust accordingly because we know how this ends; we’ve already seen it.

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Saturday, January 2 2016

A Year of Sovereign Defaults?

As 2016 begins, there are clear signs of serious debt/default squalls on the horizon. We can already see the first white-capped waves.

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Friday, December 18 2015

All of the World’s Money and Markets in One Visualization

How much money exists in the world?

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