Wednesday, January 04, 2017

The Consequences Of Helicopter Money
"With so much U.S. government debt in foreign hands, a simple decision by foreign countries to become net sellers of U.S. Treasuries is enough to cause interest rates to rise thus slowing economic growth and increasing U.S. deficits at the same time. If such net selling accelerates, it could lead to a debt-deficit death spiral and a U.S. sovereign debt crisis of the type that have hit Greece and the Eurozone periphery in recent years. In short, helicopter money, which both Trump and the Fed may desire, could have far less potency and far greater unintended negative consequences than either may expect."
- Jim Rickards*
LINK HERE to the essay
What Are the Most Prevalent Risks
For China In 2017?
Brandywine Global co-Director of Global Macro Research Chen Zhao discusses his outlook for China in 2017 - he points out even if Trump puts on a 40% trade tariff, China could devalue by 40% to negate the tariff .. 7 minutes
Your Questions Answered Part 2
Mcalvany Commentary 2017 .. answers to questions that were submitted over the last few weeks .. 48 minutes
Former Federal Reserve Advisor 
Danielle DiMartino Booth's New Book:
"An Insider's Unflinching Expose Of The Toxic Culture Within The Federal Reserve"
Amazon: "An insider’s unflinching expose of the toxic culture within the Federal Reserve. In the early 2000s, as a Wall Street escapee writing a financial column for the Dallas Morning News. Booth attracted attention for her bold criticism of the Fed’s low interest rate policies and her cautionary warnings about the bubbly housing market. Nobody was more surprised than she when the folks at the Dallas Federal Reserve invited her aboard. Figuring she could have more of an impact on Fed policies from the inside, she accepted the call to duty and rose to be one of Dallas Fed president Richard Fisher’s closest advisors. To her dismay, the culture at the Fed–and its leadership–were not just ignorant of the brewing financial crisis, but indifferent to its very possibility. They interpreted their job of keeping the economy going to mean keeping Wall Street afloat at the expense of the American taxpayer. But bad Fed policy created unaffordable housing, skewed incentives, rampant corporate financial engineering, stagnant wages, an exodus from the labor force, and skyrocketing student debt. Booth observed firsthand how the Fed abdicated its responsibility to the American people both before and after the financial crisis–and how nobody within the Fed seems to have learned or changed from the experience. Today, the Federal Reserve is still controlled by 1,000 PhD economists and run by an unelected West Coast radical with no direct business experience. The Fed continues to enable Congress to grow our nation’s ballooning debt and avoid making hard choices, despite the high psychological and monetary costs. And our addiction to the “heroin” of low interest rates is pushing our economy towards yet another collapse."
LINK HERE to the reference

Tuesday, January 03, 2017

Financial Repression In India:
Eliminating Cash Leading 
To Economic Slowdown,
Loss Of Confidence In The Currency
"The Indian government’s clumsiness in banning R500 and R1,000 notes is certain to lead to an economic and financial crisis. Looking on the bright side, it might lead to the collapse of the Modi government. If that happens, it may delay the same medicine being dispensed by other governments to nations in a similar state of development and tempted to pursue similar objectives .. The expected gains to the state are obvious, and one can see why politicians will favor the deployment of financial technology, such as mobile banking, to achieve these ends .. It appears all countries are going down this digital route .. What’s particularly concerning for the individual is the way nations appear to be ganging up together into an unelected unaccountable super-state .. We are already used to the state controlling the interest we pay and receive on our money. Banning cash increases the depth of this control, with savings and deposits being taxed through negative interest rates. The super-state’s cabal of central banks coordinates managed interest rate policies, either by liaising directly, or through the forum of the Bank for International Settlements. Quantitative easing, the direct control of bond prices through central bank purchases, reduces the risk that the market will challenge central bank policies, at least for the short-term .. Eventually, governments will destroy themselves following these political and economic policies, because the states and their experts delude themselves that they understand economics. They do not wish to understand the reasons why markets free of government interference lead to prosperity, and why government micro-management always ends in tears. Consequently, they do not see the risk to statist domination, because it comes not from private individuals, but from the states themselves. Banning cash will almost certainly speed up the decline of an electronic currency’s purchasing power, because its public rejection has the potential to become instantaneous .. Just watch how the cashless rupee behaves. Compare the potential for price inflation in a cashless economy with the Weimar or Zimbabwe inflations, when cash generally had to be obtained before it was spent. Rudolf Havenstein, President of the Reichsbank in the early-1920s, had the printing-presses working twenty-four hours a day churning out currency notes to meet an escalating cash shortage. Today, not only is access to money instant, but it is to credit as well. Currency collapse could be the greatest threat to planned national socialism. During a currency collapse a state’s liabilities will rise along with everyone else’s .. A prosperous economy is one where individuals keep and invest their wealth productively, as all experience has shown."
- Alasdair Macleod
link here to the reference
India's Physical Cash Elimination 
Leading To Fall In Economic Activity
"Over 50 days after Indian Prime Minister Narenda Modi stunned India's population when he announced on November 8 he would unexpectedly eliminate 86% of the existing currency in circulation in what was supposed to be a crackdown on the shadow economy, but instead has resulted in a significant hit to the broader, cash-based economy, overnight we noted the first official confirmation of how substantial the impact of Modi's demonetization has been, when the Nikkei India Manufacturing Purchasing Managers Index printed at 49.6 in December, the first contraction reading since December 2015, as the war on cash crippled demand. According to the report, output and new orders fall for first time in one year; companies reduced buying levels and payroll numbers; Input cost inflation accelerated, while charges rose at softer rate .. A continued slowdown will strip India of its position as one of the world’s fastest-growing big economies and risk a political backlash against Modi."
LINK HERE to the article
Federal Reserve Critic Looking For A Seat 
At The Table? - Dr. Ron Paul* Speaks Out
Could the Federal Reserve’s harshest critic now be prepared to become part of the very entity he was trying to end? The Campaign for Liberty, the organization founded by former congressman and two-time presidential candidate Ron Paul, is looking to get Paul appointed to the Federal Reserve Board. It’s a surprise announcement since Paul, arguably the most famous libertarian, has championed the Audit the Fed and End the Fed movements. Kitco News spoke with Paul and he confirmed that the Campaign for Liberty is looking to do exactly that; getting Paul a voice in the Fed. When pressed on whether this is a position he wanted, Paul hedged that it would be “interesting” but the odds of him being appointed are “pretty slim.” “You have to be realistic that the Fed is pretty much a closed club. It would be interesting to do it – and it would be difficult not to do it …I think we have to keep the heat on them and they have to explain why they wouldn’t consider a person like myself and that might be to our advantage to call attention to monetary policy.” .. 6 minutes