Sunday, January 25, 2015

Prince Michael of Liechtenstein:
"QE is a Sign of Helplessness"
"It Will Not Reach the Real Economy"
"The European Central Bank’s decision to introduce a program of Quantitative Easing (QE) is not a win-win situation but rather an expression of helplessness ... that politicians in European Union countries are not prepared to address the necessary reforms .. Necessary basic reforms are crucial in Europe if it is to restore global competitiveness, increase productivity and get the unemployed back to work. This includes reducing the share of national and local government in the economy. This will reduce the overheads of the national economy and reduce the deficit .. Zero to negative interest rates are also destroying savings and reducing personal retirement provisions. Pensions have been hit hard. This situation has been exacerbated by the fact that government pension schemes are insufficiently financed .. The real problem with the QE program of buying sovereign bonds is that it takes the pressure for reform off the politicians. The ECB has already helped several European governments buy time so they can carry out reforms. Most of them – and especially France – have failed to use this opportunity ... irresponsible attitudes will not change with QE."
LINK HERE to the essay
Matthieu Ricard: 
Let Altruism Be Your Guide
Sunday Night Special
Outside Our Box
Matthieu Ricard is a "happiness researcher" & a Buddhist monk .. What is altruism? Put simply, it's the wish that other people may be happy - altruism is also a great lens for making decisions, both for the short & long term, in work & in life .. 16 minutes
Tsunamis Most Often Come 
Without Warning
Euro Pacific Capital's John Browne analyzes the ramifications of the removal of the Swiss peg to the euro .. highlights how the Swiss National Bank (SNB) made this decision to protect the savings of the Swiss people & their way of life - the SNB felt obligated by national interest to play no further with the European Central Bank (ECB)'s monetary policy games .. "Possibly, the worst damage has been to the credibility of central bank pronouncements in general. In the future, so-called 'forward guidance' on low interest rates likely will become increasingly difficult. Further, the Swiss may be perceived as having 'left' the Eurozone. If so, their departure may lend a certain legitimacy for actual members such as Greece to leave also, precipitating fresh concerns about the future of the euro, now the world's second fiat currency. Perhaps investors still heavily committed in bubble markets, and trusting in a well-timed exit if danger threatens, should remember the speed with which the stunning Swiss announcement hit the markets. Although the SNB had denied that any such move would happen, even just days before the knife was thrust, it should reveal to all just how important denial has become in the lexicon of the modern economy. Seismic events occur usually with savage suddenness and seldom gradually. Investors would be well served in looking ahead to future shocks, and structuring their portfolios accordingly."
LINK HERE to the essay
Axel Merk: Why Asset Prices 
Must Return To Lower Levels
Interview with Axel Merk - a noted expert on world currencies .. discussion on the removal of the Swiss peg to the euro, the European Central Bank's announcement of its QE program .. In his opinion, recent events are exactly the kind the symptoms he's been expecting as the strategy pursued by central banks since the financial crisis -- to force capital into speculative assets (financial repression) .. he projects the surprises in store for us & the systemic instability we're beginning to see are just getting started .. 35 minutes
Get Ready for 
Negative Interest Rates
In the United States
Financial Repression Unfolding
Mises posted commentary on rationale why it is very likely that negative interest rates, now in growing prevalence across Europe, are coming to America: "I predict that the Fed will start charging negative interest rates on bank reserve accounts, which will ripple through the markets and result in negative interest rates on savings at banks. I make this prediction only because it is the logical action of the Keynesian managers of our economy and monetary policy. Our exporters will scream that they can’t sell goods overseas, due to the stronger dollar. So, what is the Fed’s option? Follow the lead of Switzerland and Denmark and impose negative interest rates in order to drive down the foreign exchange rate of the dollar. It is the final tool in the war on savings and wealth in order to spur the Keynesian goal of increasing 'aggregate demand'. If savers won’t spend their money, the government will take it from them."
link here to the reference
Central Banks Beginning
to Lose Control
John Rubino* is interviewed by Gordon T Long* .. discussion on the effects of falling oil prices, the removal of the Swiss peg to the euro, the crisis in central banking .. Rubino: "the economic policy around the world is not sustainable. They only have one tool which is easy money which they must do more and more of it over time to maintain normality in the world. At some point they run out of the ability to create more currency and monetize more debt. The debt that is required becomes overwhelming and the system spins out of control We are seeing the early stages of that now with all sorts of crazy volatility springing up in places around the world where no one suspected .. The Central Banks of the World are Beginning to lose control of the process!" .. 33 minutes
Richard Russell* Predicts 
Within A Year All Physical Gold 
Will Be Swept Off The Market
"In this time of massive liquidity, I see the world’s stock markets as comparable to a powder keg. The wick is lit and no one knows when the whole pile will ignite .. There is a giant secret stirring under today's market. China, India, Russia and almost every central bank is buying physical gold. I'm guessing that within another year, physical gold will be swept off the market."
link here to the article
click to enlarge
"The problem with the global economy in general is debt. You cannot cure a debt-deflation problem via attempts to force more debt into the system. It is axiomatic. The cure cannot be the same as the disease."
- Mish Shedlock*
[Cliff Note: Do a site search for the solution according to former Treasury Secretary (& one of our Most Dreadful Advisers) Larry Summers. Consider whether our world should be following the advice of those with power (like Summers) or the Advisers we honor with a '*'. For those who think the problems are the result of Republicans or Democrats, consider that 'Advisers' like Larry Summers & Tim Geithner were in position of power for both Bush & Obama.]
Peak Prosperity News Update
Peak Prosperity's Chris Martenson updates on financial & economic news of the past week .. implications of the removal of the Swiss currency peg: "Central bankers are doing everything they can to keep their system going" .. emphasizes how QE enriches only a few, not Main Street - when you print money out of thin air, you are transferring wealth, not creating wealth .. 8 minutes
Why Money Printing
Will End Badly
GoldCore (from Dublin, Ireland) commentary on quantitative easing (QE), which in many ways is like money printing .. QE is all about financial repression - devalued currencies, diminished purchasing power, diminished savings, devalued pensions & "the reallocation of the monetary pool .. " QE is like a Pandora's box - once it is opened it can never be put away again - if there is any problem in the economy now, we will go directly to QE .. "What we are seeing is the wholesale capture of the monetary system by special interests and the mass confiscation of wealth from pensioners and savers to governments" [& their closest friends] "We have just passed a monetary Rubicon that may undermine the very basic social contract: work hard and you will prosper."
LINK HERE to the commentary
He can create money out of thin air
BUT HE CAN'T CREATE WEALTH OUT OF THIN AIR. THAT IS AN IMPORTANT DISTINCTION THAT MIGHT HELP PEOPLE UNDERSTAND WEALTH AS OPPOSED TO MONEY .. OUR MODERN DAY FIAT MONEY DOES NOT REPRESENT A TANGIBLE MEASURE OF WEALTH. THOSE WHO THINK IT DOES ARE THE CONNED IN 'THE GREATEST CONFIDENCE GAME ON EARTH' ... "Europe's QE is being sold as a low risk, one way bet. Worryingly, there has been no talk of the actual cost or the ramifications. So who pays? Someone has to, you can not just create wealth out of thin air. The answer is “we do, you and I”, in the form of devalued currency, diminished savings and devaluing pensions."
America Has
A New Aristocracy
The Economist essay on how America is trending away from the principles of its founding fathers .. Thomas Jefferson did not want to create an aristocracy founded on wealth & birth .. but a look at some of the candidates to the next U.S. Presidential election funds several contenders whose fathers or husbands ran or held office .. but we are not talking just wealth here: "When the robber barons accumulated fortunes that made European princes envious ..., today's rich increasingly pass on to their children an asset that cannot be frittered away in a few nights at a casino. It is far more useful than wealth, and invulnerable to inheritance tax. It is brains." .. more educated people are marrying each other, then educating their children highly, living also in the neighborhoods with the best schools .. "The solution is not to discourage rich people from investing in their children, but to do a lot more to help clever kids who failed to pick posh parents .. America's universities need an injection of meritocracy." 
[Küle Comment: There are points in this essay we would argue with. However, the main point (America is now run by Aristocrats) is essential. Money has a way of creating a virtuous circle for the wealthy & vicious circle for the poor BUT It is our main theme to get everyone to understand how foolish it is to have privately controlled creation & distribution of the public's money. It entrenches the natural forces of wealth to serve the already wealthy. How can anyone think that private control of the money won't create an Aristocracy? Even the government becomes subservient if they want money. The public? They are S-O-L. There is a system in place that is 'new age' Aristocrats & Serfs. Today's serfs don't have to work the land owned by the Nobles. They have to work for a form of Money which is controlled by the Nobles. Under this system, the President & the Congress must serve the Nobles if they want money to get anything done. Guess who was the last President to challenge the Nobility's control of the people's money?]  
LINK HERE to the essay
Boone Says Saudi Prince Doesn't 
Know What He's Talking About
Boone Pickens, BP Capital, disagrees that oil will not go up to $100 again, says that once enough rigs are shut down in the U.S., the price will climb .. 3 minutes
click to enlarge
Faith in Fiat Currencies
Will Lead To Hellish Results
"The fear of deflation has become the cornerstone of Keynesian economic thought. A lack of inflation has been used to explain periods of economic weakness from the Great Depression of the 1930s, to the Great Recession .. And now, that philosophy has been adopted as gospel by those that control the Federal Reserve and virtually every central bank on the planet .. In reality deflation is cathartic, and a necessary condition to heal the economy. If deflation were allowed to naturally run its course, as it did in the brief Depression of 1920–21, depressions would be sharp but fairly short in duration. And the economy would find itself on firm footing fairly quickly .. Keynesians are unable to acknowledge that printing and borrowing money has simply been a failure in bringing sustainable and vibrant growth back to economies .. Much like in the U.S. and Japan, Europeans will find that monetizing debt will do little in the way of engendering growth; but will be remarkably successful in destroying the purchasing power of the middle class. Central bankers tend to be duplicitous and incompetent plutocrats. Investors would be far better off placing their faith in markets and real money instead of fiat currencies and empty promises. Of course, this misplaced faith will eventually lead to the biggest shock of all .. the soon to arrive collapse of paper currencies, soaring gold and silver prices and the insolvent sovereign debt backed by central banks. When governments finally lose control of the markets they currently dominate — currencies, bonds, commodities, and equities — the collapse of the euro against the Swiss franc will just be seen as just an opening act compared to the chaos that is still to come."
- Michael Pento*
link here to the article
Charles Biderman on
Financial Repression
He Says The Repression Is Not Creating A Recovery. It Is Creating Recession.
Frequently on CNBC, Fund Manager Charles Biderman points out that when you create money, you create debt. When that debt goes to front run demand, you will face the problems we are now facing in the energy industry OR ghost cities in China. 0% interest rates have brought forward demand which is resulting in commodity deflation. "There is now no relationship between the economy and the stock market because of zero interest rate policies!" .. "The markets are rigged by the central bank policy of zero interest rates. To the extent the markets are rigged we don't have free markets. That would be Financial Repression!" .. We are in a no growth world. We have governments in the US, Europe, Japan and China that are anti-growth, anti-free market growth. On the other hand we have central banks that are committed to creating as much money as is necessary to keep stock markets as high as they can be, even though we have a total disconnect between the economy and the markets. The only reason the markets are doing as well as they are doing (both equity and bonds) is because of zero interest rates. In essence free money from the central banks! .. The zero interest rate policy of the global central banks is creating a global recession, not a global recovery!" .. 30 minutes
"The World Is Running Out 
Of Positive-Yield Bonds"
German 10-Year Bund Yield
Mish Shedlock* points out through the above chart & some article links how European bond yields have plunged lower & are likely to go even lower into negative yield territory - & the world in general appears to be moving in a similar direction towards negative yields - in other words, you may the government to buy their bonds .. quotes fund manager: "Global central banks are petrified of deflation .. The real effectiveness of QE is through the portfolio-rebalancing effect. The world is running out of positive-yielding government bonds."
LINK HERE to the commentary