Tag Archives: Central Banks

We have argued the inevitability of Fed-administered hyperinflation, prompted by a global slowdown and its negative impact on the ability to service and repay systemic debt. One of the most politically expedient avenues policy makers could take would be to inflate the debt away in real terms through coordinated currency devaluations against gold, the only monetize-able asset on most central bank balance sheets. To do so they would create new base money with which to purchase gold at...

Submitted by Patrick Watson via MauldinEconomics.com, Central bankers use low or negative interest rates so that it leads to more investment. For them interest rates are a consequence of the currently very low inflation rates. Patrick Watson argues in the exactly opposite way: Falling prices are a consequence of low interest rates and not the opposite: We see two reasons why this can be true: High, maybe excessive investment is happening in China (alas not in Europe). Cheap costs of...

In the 1970s economists started to incorporate rational expectations into their models and not long after the seminal Kydand & Prescott (1977) article named Rules Rather than Discretion: The Inconsistency of Optimal Plan was published. Their work has been driving the mainstream macroeconomic debate ever since. The question raised in this debate is how policy-makers can credible commit to promises made today when future events may cause short-term pain if restricted by stringent rules...

Shinzo Abe and Haruhiko Kuroda, professional yen assassins Photo credit: Toru Hanai / Reuters Policy-Induced Contrition in Japan As we keep saying, there really is no point in trying to make people richer by making them poorer – which is what Shinzo Abe and Haruhiko Kuroda have been trying to do for the past several years. Not surprisingly, they have so to speak only succeeded in achieving the second part of the equation: they have certainly managed to impoverish their fellow Japanese...

The Federal Reserve really wants to raise rates, but they do not dare as the consequence of interrupting an unprecedented level of capital misallocation is too grave to face head on. So our money masters continue their low interest rate policy; pulling society further and further into a capital structure that cannot be sustained long term. In other words, scare capital is consumed in order to feed the present structure of production. Low rates thus cement what cannot be upheld and the...

  Deluded Central Planners BoJ governor Haruhiko Kuroda Photo credit: Toru Hanai / Reuters Zerohedge recently reported on an interview given by Lithuanian ECB council member Vitas Vasiliauskas, which demonstrates how utterly deluded the central planners in the so-called “capitalist” economies of the West have become. His statements are nothing short of bizarre (“we are magic guys!”) – although he is of course correct when he states that a central bank can never “run out of ammunition”....

During the months of March and April of 2016 we released a series of proprietary research reports indicating signficant weakneses that we found in the European banking system and released it for sale through the blockchain (reference The First Bank Likely to Fall in the Great European Banking Crisis). This was performed by the same macro forensic and fundamental analysis team that first warned about the pan-European sovereign debt crisis in 2009 and 2010 (reference Pan-European...

Things are increasingly upside down in the brave new centrally planned world: thanks to negative deposit rates central banks have put an explicit cost on saving, while in various instances, such as taking out a mortgage in Denmark and the Netherlands, the bank actually pays the borrower, thus rewarding living beyond one's means. Curiously, it was just a month ago when an offer was spotted in Germany offering a negative -1% rate on small consumer loans issued by Santander Bank.  ...

The current financial market volatility increasingly reflects loss of faith in policy makers. Celebrity central bankers are learning that they must constantly produce new miracles for their followers. First, the measures implemented since 2009 created an artificial stability and an asset price boom in many markets. But the absolute rate of GDP expansion and level of price changes is inadequate to solve global debt problems. Second, new initiatives seem the risky response of clever...

“At the end of the day, negative interest rates are taxes in sheep’s clothing. Few economists would ever claim that raising taxes on households will stimulate spending. So why would they think negative interest rates will?” Those are the shocking words of St.Louis Fed Director of Research Christopher Waller whose brief note today will be required reading for everyone at The Bank of Japan, The ECB and every other central banker on the verge of NIRP… If you pick up any principles of...