Tag Archives: Central Banks

After a horrible December and a rough start to the year, as if manna from Heaven the clouds parted and everything seemed good again. Not 2019 this was early February 2015. If there was a birth date for Janet Yellen’s “transitory” canard it surely came within this window. It didn’t matter that currencies had crashed and oil, too, or that central banks had been drawn into the fray in very unexpected ways. Actually it...

The surprise resignation of governor of the Reserve Bank of India poses a question mark over its policies and independence ahead of next year’s election.Urjit R. Patel, the governor of the Reserve Bank of India (RBI), unexpectedly resigned on 10 December, just four days before a crucial board meeting on discuss internal governance issues.His resignation came amid a period of acute tension between the RBI and the Indian government over a range of issues, from banking regulations and the use...

Numbers from Bizarro-World The past few months have been really challenging for anyone invested in gold or silver; for me personally as well. Despite serious warning signs in the economy, staggering debt levels and a multitude of significant geopolitical threats at play, the rally in risk assets seemed to continue unabated. In fact, I was struggling with this seeming paradox myself. As I kept looking at the state of...

Worldwide Liquidity Drought – Money Supply Growth Slows Everywhere This is a brief update on money supply growth trends in the most important currency areas outside the US (namely the euro area, Japan and China)  as announced in in our recent update on US money supply growth (see “Federal Punch Bowl Removal Agency” for the details). The liquidity drought is not confined to the US – it is fair to say that it is a global...

Investment Grade Junk All is now bustle and hubbub in the late months of the year.  This goes for the stock market too. If you recall, on September 22nd the S&P 500 hit an all-time high of 2,940.  This was nearly 100 points above the prior high of 2,847, which was notched on January 26th.  For a brief moment, it appeared the stock market had resumed its near decade long upward trend. Chartists witnessed the take...

There has been a lot of media coverage recently about the re-emergence of central bank gold buying and the overall larger quantity of gold than central banks as a group have been buying recently compared to previous years. For example, according to the World Gold Council’s Gold Demand Trends for Q3 2018, net purchases of gold by central banks in the third quarter of this year were 22% higher than Q3 2017, and the...

A Piece of Paper Alone Cannot Secure Liberty The idea of a constitution and/or written legislation to secure individual rights so beloved by conservatives and among many libertarians has proven to be a myth. The US Constitution and all those that have been written and ratified in its wake throughout the world have done little to protect individual liberties or keep a check on State largesse. Sound money vs. a piece of...

Federal Reserve Credit Contracts Further We last wrote in July about the beginning contraction in outstanding Fed credit, repatriation inflows, reverse repos, and commercial and industrial lending growth, and how the interplay between these drivers has affected the growth rate of the true broad US money supply TMS-2 (the details can be seen here: “The Liquidity Drain Becomes Serious” and “A Scramble for Capital”)....

In recent weeks, global financial markets have been increasingly spooked by an intensifying crisis in emerging market currencies including those of Turkey and Argentina. Add to this the ongoing currency crisis in Venezuela and the currency problems of Iran. While all of these countries have economy specific reasons that explain at least some of their currency weakness, there are some common themes such as a stronger US...

Capital Flight vs. The Effect of QE Mish recently discussed the ever increasing imbalances of the euro zone’s TARGET-2 payment system again in response to a few articles which played down  their significance. He followed this up with a nice plug for us by posting a comment we made on the subject. Here is a chart of the most recent data on TARGET-2 available from the ECB; we included the four largest balances, namely...