Tag Archives: Featured

1.  In the Commitment of Traders reporting week ending November 10 covers the few days before the US employment data and a few days after.  Speculative participants made five significant (10k contracts or more) adjustments to gross positions in the currency futures.  The prior reporting period saw only three significant adjustments, and in growing gross short euro, yen, and Swiss franc positions. This week, four currencies, euro (+14 .7k contracts), yen (+16.7k contracts), Canadian...

At the Cato Monetary Conference this week, Scott Sumner said he had a “modest” proposal, that there should be a highly liquid futures market in Nominal Gross Domestic Product (NGDP).  This caught my attention, as the futures market is a topic near and dear to my heart (I write about it every week). Sumner is known for his view that the Fed should target NGDP as the basis for monetary policy. So a futures market that predicts it would be convenient. Let’s look at his idea more closely. What,...

In fiscal year 2014, which ended September 30 2014, the Federal government of the United States reported a cumulative deficit of US$484 billion, while the total debt outstanding increased by more than a trillion dollars. For fiscal year 2015, the difference was negligible because the US Treasury conducted so called emergency measures to adhere to the Congressional imposed debt ceiling. As soon as Congressional leaders agreed among themselves, the debt ceiling was raised and US debt...

I have written previously about the interest rate, which is falling under the planning of the Federal Reserve. The flip side of falling interest rates is the rising price of bonds. Bonds are in an endless, ferocious bull market. Why do I call it ferocious? Perhaps voracious is a better word, as it is gobbling up capital like the Cookie Monster jamming tollhouses into his maw. There are several mechanisms by which this occurs, let’s look at one here. Artificially low interest makes it...

In last week’s article, we explained how the yield curve could cause GDP to contract in The Yield Curve and GDP – a causal relationship. Some of our readers suggested the analysis was wrong on back of an outdated view of modern money creation. The critics claim modern banks are not dependent on central bank reserves to create additional money; citing a Bank of England article from 2014 (which we have been well aware of) [A] common misconception is that the central bank determines the...

Many people agree that it’s important to move to a free market in money (i.e. the gold standard). They also say that it’s just as important to fight bad taxes and regulation. In their view, government interference in the economy is like friction in a car. The more friction you add, the slower the car goes. One source of friction is much the same as any other. Let me explain why it doesn’t quite work that way, using a few examples. Suppose the government imposes an expensive tax on employers...

According to John Henry Smith, fund managers are too much focused on bench-marking their performance to a market index, over-emphasizing the importance of “alpha”. But asset managers should abstract from alpha and construct portfolios that have lower risk and higher return than the market. Impossible? This post is the second part of The Fallacies of Portfolio Volatility Measurements. The Market Return For reasons of consistency, fund managers are primarily focused on benchmarking their...

Keith Weiner, chairman of the Gold Standard Institute United States, will be presenting in Zurich, this Wednesday, October 14 at 18.30. Title: Our Monetary System is Failing, and what we can do against it We hope that the Swiss National Bank will remain safe, during the collapse of the monetary system. We fear the collapse because money flows will direct towards Switzerland again and threaten the solvability of our central bank. Some background in English on the letter to Tsipras, in...

First week of February: Speculators are closing down their short positions on the euro– both against the dollar and against CHF. The carry trade is breaking down into a reverse carry trade. This leads to a strengthening of the euro versus CHF. Given that US data was better than expected, the speculative USD against CHF position should further augment. It was at 4600 contracts versus CHF.No SNB interventions: Sight deposits decreased slightly by 0.2 billion CHF, this implies that the SNB is...

Sehr geehrter Premierminister Alexis Tsipras, Zunächst herzlichen Glückwunsch zur neu gebildeten Regierung.Leider hat sich damit nicht viel geändert. Der Euro bietet seit langem Griechenland einen perversen Anreiz Geld zu leihen. Nun ist Ihr Land in der Schuldenfalle. Durch herkömmliche Mittel kann Griechenland nicht zurückzahlen. Je früher man diese einfache Tatsache anerkennt, desto besser. Die Troika droht die Kosten des Ausscheidens aus dem Euro zu maximieren. Sie kann den Zugang zu...