The World's Central Banks Are Distorting & Inflating Asset Prices
"The purpose of central bank financial repression and ZIRP is to distort and inflate asset prices. Our monetary politburo even admits that it is in the monetary scam business via its self-serving doctrine called 'wealth effects' .. The game here is to drive the stock market averages ever higher through massive liquidity injections into the Wall Street dealer markets. This purportedly causes people to feel richer and to spend and invest more, creating a virtuous circle of prosperity, world without end .. We know by now, however, that 'wealth effects' money printing does not help the main street economy. And while it does produce awesome financial market gains—–these turn out to be unsustainable bubbles that inexorably crash .. The resulting financial bubbles have been global in scope .. The true nature of today’s Keynesian central banking - The actual impact of the current 'wealth effects' regime is not economic growth and rising profits, but, instead, a vast inflation of financial assets." - David Stockman* LINK HERE to the essay
Article on fund manager Mark Spitznagel, author of Dao of Capital & one of the most bearish investors on Wall Street .. most of the time, bearish bets usually lose a lot of money when stocks are going up - but this guy has made lots of money, even 30% returns last year .. his strategy stems from his skepticism toward government efforts to revive the economy, he acknowledges that the stimulus policies of the Federal Reserve & other central banks have the power to drive stocks higher - But they will ultimately be self-defeating .. "The Fed has created a trap in this yield-chasing environment .. It allows you to be long, but it gets you in position to be short when it’s all over." LINK HERE to the article
In his latest Hmmm, Grant Williams* writes in a style like a story being told by a grandfather to his grandson on how gold came back into the international monetary system, how China rose with gold & embraced it as the cornerstone of its monetary system .. central banks of indebted countries eventually came to ban the ownership of gold by its citizens, while China encouraged its citizens to invest in gold ..
Click on "Hmmm November 10" to download the report (may have to provide your email address), or hit "View Fullscreen" far below next to the 'S' icon to enlarge the viewing .. John Mauldin, Best-Selling author and recognized financial expert, is also editor of the free Thoughts From the Frontline that goes to over 1 million readers each week. For more information on John or his FREE weekly economic letter go to: http://www.frontlinethoughts.com/learnmore .. permission granted by Grant Williams to us to post the below, courtesy of www.vulpesinvest.com funds.
Boom Bu$t .. discussion with James Galbraith – professor of economics at the University of Texas in Austin & author of The End of Normal. .. Galbraith tells what encouraged him to write his new book, gives us his take on why longer-term weaknesses in the U.S. growth model may mean secular stagnation. .. also discussion with Thomas Palley –Washington DC economist & research associate at the Economic Policy Institute - Dr. Palley tells how he thinks the U.S. economy is doing & gives his take on wage growth & income inequality .. 1/2 hour total program
Ambrose Evans-Pritchard reports that the European Commission has launched a €315bn “New Deal” to pull Europe out of its economic slump over the next 3 years, "but will provide almost no new money of its own and is relying on subprime forms of financial engineering" .. Geneva University's Professor Charles Wyplosz: "The money is chicken feed and it won’t do anything to kick-start growth .. It is unbelievable they are doing this rather than real fiscal expansion. The private sector will just take governments to the cleaners .. This is really an excuse to pretend they are they doing something while the austerity is still going on. It will take too long to work and there will be a big fight over the projects as every country tries to get a share of the cake." LINK HERE to the article
Bruegel visiting research fellow Jim O’Neill talks about the People’s Bank of China cutting interest rates for the first time since 2012 in a bid to support growth, why he sees Japan as more of a concern than China .. 3 minutes
Jim Rickards* gives his perspective on what he thinks could happen if the Swiss vote Yes on Sunday for the Swiss Gold Initiative .. one aspect of the initiative is to bring Swiss gold back to Switzerland - 10% of it is in Toronto, about 30% of it is in London - that gold in those cities would be sent back to Switzerland .. "It’s true that a move like that does not change the total supply of gold. But it does reduce the floating supply. The floating supply is the gold that’s available for pledging to support paper gold contracts.When gold is moved from a place like London to Switzerland… the paper gold game… is made more dangerous." .. Rickards explains the nature of paper gold contracts, how a lot of gold has been loaned/leased out & so the amount of gold appears to be much bigger than the real supply is .. "As long as there is gold available and pledged — or, 'rehypothecated' is the technical term — ten, twenty or even fifty times that puts a lot of gold on sale in the market that doesn’t actually exist. That keeps the price down."
Rickards says the availability of physical supplies is extremely tight .. "Putting all of these things together, the Swiss gold referendum could have a massive impact on the gold market. It would be extremely bullish, not only putting a floor under gold but also sending the price of gold up significantly. The price would stay there too because the buying pressure would not go away — the Swiss would be in the market for years." LINK HERE to the essay
Crony Capitalists In France Are Desperate To Erase U.S. Internet Companies
Crony capitalism is big in Europe .. Acting Man essay focuses on crony capitalism in France .. France has an obsession with stifling competition to protect established businesses with all sorts of legal restrictions, burdening regulations & taxation .. "The French don’t play. Ever since Minitel bit dust, the continental power has been hopping mad about American domination of Internet services. And over the past weeks, attacks on U.S. giants have escalated from Paris to Lille . If France wanted to see viable European competition for U.S. internet companies arise, it would need to adopt free market principles. As the writer of the article points out, it looks instead more and more like all they want is waging a 'perpetual guerrilla war against foreign tech powers in a futile and bitter battle against the future.'" LINK HERE to the essay
Rogoff explains how if paper money is eliminated, banks would find it easier to apply negative interest rates on bank deposits - this is financial repression .. With the availability of paper money, the application of negative interest rates on bank deposits could be circumvented by withdrawing the bank deposits & keeping physical cash in a safe or under the mattress, thereby not being subject to negative interest rates on that physical cash .. 4 minutes
"Why would I contemplate that central bank measures might be losing ability to keep the global Bubble afloat? Over recent weeks we’ve seen the concerted efforts of team Yellen, Draghi, Kuroda and the PBOC have minimal impact on the fragile 'Periphery.' Data out of Europe has been just dreadful .. Something to ponder: A record $4.0 TN of international corporate bond issuance in the face of a faltering global Bubble. Like many things these days, it brings back bad memories of just before the financial crisis." - Doug Noland link here to the commentary
This is the best interview format for interviews with Rickards, offering the most insight from him; discussion on the following topics: * Gold price action, * The time horizon for the next international monetary crisis, * Depressions are structural, not cyclical * Bail-Ins to be announced post G20 Australia * Will quantitative easing lift the U.S. out of depression when it didn’t work in Japan * No interest rate increases in 2015 * QE4 by end of 2015 possibly 2016 * Bank of Japan printing effect on U.S. stock market * The Fed is leveraged 80 to 1, IMF leveraged 3 to 1 * Will the IMF bail out the Fed 1 hour LINK HERE to the November Interview
Gillian Tett, markets & finance commentator & an Assistant Editor of the Financial Times, wrote an essay on the benefits of gold & the increasing concerns about money & how money works in a bottomless cyber space: "Most ordinary people have no idea what central banks are really doing, with their trillion-dollar experiments. They are unnerved about how money works in a bottomless cyber space. But the beauty of gold is that it seems tangible, clear and finite. It also seems timeless, creating an impression of permanent, intrinsic value. Of course, this image is – ironically – also an illusion. You cannot actually do anything practical with gold (as you can, say, with a lump of coal). Its value, like that of fiat currency, depends on social convention. But culture, as Greenspan now recognises, is a very powerful thing – especially in a world of finance that is rushing more deeply into ethereal cyberspace every day." LINK HERE to the essay LINK HERE to an alternative source
The Swiss National Bank (SNB)’s reference interest rate is at its lowest level in at least two decades, a sign investors are bracing for extra policy measures to stem the franc’s appreciation .. The exchange-rate peg between the euro & the franc is under pressure with a vote on SNB gold holdings less than a week away & the euro declining as the European Central Bank broadens its asset-purchase program .. "Swiss policy makers have pledged to take further steps immediately if necessary, and have cited as a possibility a charge on deposits commercial banks keep with the SNB." .. Swiss bank: 'The market is anticipating SNB action .. They’re starting to price in negative rates very aggressively." LINK HERE to the article