The Dollar – King Rat Of Failing Currencies

BY Alasdair Macleod – Re-Blogged From Gold Eagle

The explanation for the sudden halt in global economic growth is found in the coincidence of peak credit combining with trade protectionism. The history of economic downturns points to a rerun of the 1929-32 period, but with fiat currencies substituted for a gold standard. Government finances are in far worse shape today, and markets have yet to appreciate the consequences of just a moderate contraction in global trade. Between new issues and liquidation by foreigners, domestic buyers will need to absorb $2 trillion of US Treasuries in the coming year, so QE is bound to return with a vengeance, the last hurrah for fiat currencies. However, China and Russia have the means to escape this fate, assuming they have the gumption to do so.

Introduction

It may be too early to say the world is entering a significant economic downturn, but even ardent bulls must admit to it as an increasing possibility. Financial analysts, both bovine and ursine, face a complex matrix of factors when judging the future effect of any downturn on currencies, and of the prospects for the dollar in particular.

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Cashless Society Threatens

By Mark O’Byrne – Re-Blogged From http://www.Gold-Eagle.com

Swedish authorities concerned cashless society is happening ‘too quickly’ and heading into ‘negative spiral’
– Only 25% of Swedes paid in cash at least once a week in 2017, 36% never use cash
– Cash usage in Sweden falling both as share of GDP and in nominal terms
– Sweden may be world’s first economy to introduce a cryptocurrency, the e-krona
– Cashless is not a disincentive for illegal drug trade, Guardian finds
– Gold in safe jurisdictions will protect against raids on cash and wealth

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”It’s A Wonderful Life” Is A Wonderful Lesson

By Mark O’Byrne – Re-Blogged From http://www.Gold-Eagle.com

– Christmas film serves as reminder that savings are not guaranteed protection by banks
– Savers are today more exposed to banking risks than ever before
– Gold and silver investment reduce exposure to counterparty risks seen in financial system
– Basket of Christmas goods has climbed since 2016 thanks to 11% climb in gold price

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Deposit Bail In Risk As Spanish Bank’s Stock Crash

 By Mark O’Byrne – Re-Blogged From http://www.Gold-Eagle.com

– Banco Popular stock crashes most on record – down 63% this year to 34 euro cents

– Spanish bank tells employees – “Don’t panic”

– Risk of Spanish banking crisis as Banco Popular credit curve inverts

– Banco Popular needs to find at least €4 billion more capital – analysts

– Deposits over €100,000 (euro) vulnerable to bail-in

– EU, U.S., UK push for bank ‘bail-ins’ poses risks to depositors

Source: Google

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Ireland’s Biggest Bank Charging Depositors Negative Interest Rate Madness

By Mark O’Byrne – Re-Blogged From http://www.Gold-Eagle.com

Deposits at Bank of Ireland are soon to face charges in the form of negative interest rates after it emerged on Friday that the bank is set to become the first Irish bank to charge customers for placing their cash on deposit with the bank.

This radical move was expected as the European Central Bank began charging large corporates and financial institutions 0.4% in March for depositing cash with them overnight.

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Will Ireland Be First Country In World To See Bail-in Regime?

By Mark O’Byrne – Re-Blogged From http://www.Silver-Phoenix500.com

Deposit bail-in risks are slowly being realised in Ireland, after it emerged overnight that FBD, one of Ireland’s largest insurance companies, have been moving cash out of Irish bank deposits and into bonds.

Revelations regarding deposit bail-in risks came in the wake of warnings of a new property crash centered on the housing market in Ireland. The former deputy governor of the Central Bank warned in an op-ed in a leading international financial publication, Project Syndicate, that Ireland is at risk of another housing market crash.

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Why The US Benefits From Global Financial Crisis

By Cliff Droke – Re-Blogged From http://www.Gold-Eagle.com

Let’s turn our attention to the global economy. Last week the Bank of England said it would buy 60 billion pounds of government debt in order to cushion the economy against the impact of the recent Brexit vote.  England and the European Union are emulating the quantitative easing (QE) policies of the US Federal Reserve but so far without any measurable success.

Meanwhile the Bank of Japan (BoJ) has begun a massive stimulus program which may already be having an effect on Japan’s bond yields.  There has also been talk of Japan initiating a “helicopter money” scheme whereby the BoJ would directly finance fiscal spending.

Loose money policies in England, China and Japan are indeed all the talk right now among investors. The attempts by the ECB, BoJ and People’s Bank at stimulating their way out of deflation have yet to show appreciable results, but this won’t stop them from trying.

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An Escalating War On Cash

By John Browne – Re-Blogged From http://www.Silver-Phoenix500.com

On February 16th, The Washington Post printed the article, “It’s time to kill the $100 bill.” This came on the heels of a CNNMoney item, the day before, entitled “Death of the 500 euro bill getting closer.” The former cited a recent Harvard Kennedy School working paper, No. 52 by Senior Fellow Peter Sands, concluding that the abolition of high denomination notes would help deter “tax evasion, financial crime, terrorist finance and corruption.” In recent days, former Treasury Secretary Larry Summers, ECB President Mario Draghi, and even the editorial board of the New York Times, came out in support of the elimination of large currency notes. Apart from the question as to why these calls are being raised now with such frequency, the larger issue is whether these moves are actually needed or if they merely a subterfuge for more complex economic manipulations by central banks to extend control over private wealth.

In early 2015, it was reported that Spain had already limited private cash transactions to 2,500 euros. Italy and France set limits of 1,000 euros. In France, all cash withdrawals in excess of 10,000 euros in a single month must be reported to government agencies. In the U.S., such limits are $10,000 per withdrawal. China, India and Sweden are among those with plans under way to eradicate cash.

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Euro Bond Crisis Returns As Germany Pushes Euro Sovereign Debt Bail-in Clause

By Mark O’Byrne – Re-Blogged From http://www.Silver-Phoenix500.com

European Banks holding European sovereign debt may have to take haircuts and be part of bail in plans should that same debt default, according to a plan being pursued by German government advisers. In another attempt to shelter German tax payers from the largess and excess of fellow European neighbouring countries’ national banks, the move could trigger a run on billions of euro of sovereign debt of said banks. In an article penned by the Telegraph’s Ambrose-Evans Pritchard, one of the council’s dissenting members describes the plan as the “fastest way to break up the Eurozone”.

The plan, by The German Council Of Economic Experts, calls for banks to be bailed in should losses occur from a sovereign default before the European Stability Mechanism steps in to stabilise the situation.

Italian and Spanish banks hold vast amounts of their national government debt; in Italy’s case they are supporting the Italian treasury. Should that debt default, which is a very real possibility, then Italian banks would have to take significant losses first, only then would the ESM be allowed to step in.

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Move Over Greece, It’s Italy’s Turn

Re-Blogged From Financial Sense

Financial Sense recently had the pleasure of speaking with George Friedman, internationally recognized geopolitical forecaster and best-selling author, to get an update on escalating problems in Europe.

George says Greece was not an outlier, but merely a precursor to a much larger battle now taking shape in Italy, the fourth largest economy in Europe. Dr. Friedman is Founder and Chairman of Geopolitical Futures, a new online publication dedicated to forecasting the course of global events.

Here’s what he had to say on Wednesday’s podcast:

“Greece was not an outlier. It was a forerunner, and a lot of the battles that were fought in Greece were precursors to a much larger one, which is Italy.

The Italians have non-performing loans at 17% officially—that’s a very flexible number and you can go up or down—but since most of the non-performing loans are corporate loans, we’ll say that about a quarter of the assets of banks are at risk and it’s the largest ones that are most at risk.

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The War On Cash Is About To Go Into Hyperdrive

By Graham Summers – Re-Blogged From http://www.Gold-Eagle.com

The global Central Banks have declared War on Cash.

Historically, one of the safest things to do when the markets begin to collapse is to move a significant portion of your holdings to cash. As the old adage says, during times of deflation, “cash is king.”

The notion here is that cash is a safe haven. And while earning 1-2% in interest doesn’t do much in terms of growing your wealth, it sure beats losing 20%+ by holding on to stocks or bonds during their respective bear markets

However, in today’s world of fiat-based Central Planning, cash represents a REAL problem for the Central Banks.

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Don’t Confuse Debt with Wealth

By Guy Christopher – Re-Blogged From Money Metals Exchange

If you don’t have a magical crystal ball to see the future, then a good history book will do the job. Understanding the past offers a full color panorama to the dangers and opportunities facing you in 2016.

Unpayable debt is becoming the Big Story of the 21st Century across the globe. Life-altering disruptions will be the norm, with little that mankind has not seen before.

In early November, Congress recklessly increased American spending and debt by another $1.14 trillion. Lawmakers long ago erased all limits to printing money and creating debt backed by nothing. The total world debt is unknown and uncountable. Pick any figure in the hundreds of trillions and you’ll be close.

Governments intend for you to pay those debts. To ensure you don’t argue, they must increase control.

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Hang Onto Your Wallets

By Ellen Brown – Re-Blogged From http://www.Silver-Phoenix500.com

In uncertain times, “cash is king,” but central bankers are systematically moving to eliminate that option. Is it really about stimulating the economy? Or is there some deeper, darker threat afoot?

Remember those old ads showing a senior couple lounging on a warm beach, captioned “Let your money work for you”? Or the scene in Mary Poppins where young Michael is being advised to put his tuppence in the bank, so that it can compound into “all manner of private enterprise,” including “bonds, chattels, dividends, shares, shipyards, amalgamations . . . ”?

That may still work if you’re a Wall Street banker, but if you’re an ordinary saver with your money in the bank, you may soon be paying the bank to hold your funds rather than the reverse.

Four European central banks – the European Central Bank, the Swiss National Bank, Sweden’s Riksbank, and Denmark’s Nationalbank – have now imposed negative interest rates on the reserves they hold for commercial banks; and discussion has turned to whether it’s time to pass those costs on to consumers. The Bank of Japan and the Federal Reserve are still at ZIRP (Zero Interest Rate Policy), but several Fed officials have also begun calling for NIRP (negative rates).

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EU Takes Countries To Court Over ‘Bail-In’ Laws

By Mark O’Byrne – Re-Blogged From http://www.Silver-Phoenix500.com

The European Commission is taking legal action against six European countries, including the Netherlands and Luxembourg, after they failed to implement rules that would allow for depositors to have their cash confiscated.

Six countries will be referred to the European Court of Justice (ECJ) for their continued failure to transpose the EU’s “bail-in” laws into national legislation, the European Commission said last Thursday according to The Telegraph.

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Bank Depositor Protection Act

cropped-bob-shapiro.jpg   By Bob Shapiro

I generally am NOT a fan of business regulation. I believe that simple enforcement of laws against fraud and other crimes should be sufficient to keep businesses on the straight and narrow.

Diligent enforcement of the law, together with every business’ best interest – serve customers, employees, and owners faithfully, or go out of business – should be all that is needed.

However, in many industries, large businesses have captured the regulators and have made a mockery of diligent law enforcement.

With that in mind, and mindful of the daily increase in the risk of a financial meltdown in the US, which would steal the savings of most Americans, I would like to propose a new regulation. (I apologize in advance for breaking one of my own cardinal rules.) But first, a little background.

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The War On Cash: Why Now?

Why are governments suddenly acting as if cash money is a bad thing that must be severely limited or eliminated?

Before we get to that, let’s distinguish between physical cash—currency and coins in your possession—and digital cash in the bank. The difference is self-evident: cash in hand cannot be confiscated by a “bail-in” (i.e. officially sanctioned theft) in which the government or bank expropriates a percentage of cash deposited in the bank.  Cash in hand cannot be chipped away by negative interest rates or fees like cash held in a bank.

Cash in the bank cannot be withdrawn in a financial emergency that shutters the banks, i.e. a bank holiday.

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War on Cash vs Bail In

cropped-bob-shapiro.jpg   By Bob Shapiro

There is a pair of troubling items which have been appearing repeatedly in the news lately:

  • There is a War on the use of Cash, and

  • Several banks which have been insolvent (bankrupt in fact) are being given the legal go-ahead to Bail In depositors’ money.

In case you’ve missed these items, or if you don’t understand why they are important, let me explain.

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FDIC Plots a Bank Heist Involving YOUR Accounts

By Guy Christopher – Re-Blogged From http://www.moneymetals.com

There’s a new front opening up in the war on your wealth. If you haven’t heard yet of the “bail-in,” you will. Even if you have, you need to know the latest…

The bail-in is another weapon in the government’s arsenal of capital controls meant to reward Wall Street cronies and separate you from your money.

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Is Your Bank Account Safe?

cropped-bob-shapiro.jpg   By Bob Shapiro

How much money do you have in the Bank? I’m not asking your net worth. Rather, whether your net worth is positive or negative, how much do you keep in savings accounts, checking accounts, certificates of deposit, Christmas club, and other accounts with your local bank?

You do realize that, whatever the amount, you are earning interest that’s below the rate of price increases as measured by the understated CPI? The purchasing power of your money in the bank is going down even as the nominal, tiny returns you receive are taxable income.

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Bail-In Normalization

Re-Blog from Andy Sutton at Silver Phoenix 500

When the bail-in first ripped through Cyprus in the first part of 2013, I wrote a series of articles about the topic and examined some documents from the Bank for International Settlements, the FDIC and Bank of England regarding treatment of depositors and their funds. To sum it up as we begin the latest chapter in what will no doubt morph into the biggest swindle ever to impact humankind, let’s recap what exactly the bail-in is.

It was determined in late 2012 that there are certain banks that simply cannot be allowed to fail – at any cost. They were quickly labeled ‘Too big to fail’. I and others added that they were too big to jail too since this select group pretty much received

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Bail-Ins and the Next Crisis

cropped-bob-shapiro.jpg   By Bob Shapiro

In 2007, a Financial Crisis, initially largely involving Sub-Prime Mortgages, hit the US. Many large banks and other financial institutions were on the brink of bankruptcy, and a few slightly smaller ones did fail.

We’re told that the FDIC exists to protect depositors, but the FDIC’s fund is so small, at $25 Billion, compared to depositor’s money at risk, at $9,283 Billion, that it’s considered a joke within the industry.

FDIC Deposits & Derivatives
Sub-Prime Loans, then also called Liar Loans, were packaged, using Fannie & Freddie guarantees, into Collateralized Debt/Mortgage Securities, and sweetheart deal ratings were extorted out of the three major ratings agencies. These, together with other derivatives, totaled almost $300 Trillion of bets made by the various financial institutions.

These derivatives were marketed widely in the US, and also in Europe. When the underlying Sub-Prime mortgages started defaulting, the prices on CMSs plunged – this is what almost crashed Europe!

To try to prevent the “End of the Financial World as We Know It,” the US Government embarked on massive bailouts of the stupidly run, “Too Big To Fail” institutions, at taxpayer expense. These bailouts have never ended, and the US FED added ZIRP (Zero Interest Rate Policy), QE1, Operation Twist, QE2, and QE3 on top of the bailouts  .

There has been something of a public uproar over the bailouts, so the idea of a “Bail-In” was tried out in Cyprus a few years ago. A Bail-In is where the law allows depositors to lose their money before others. Deposits are “converted” into stock of the institution so that it can continue mismanaging its affairs without interruption. That stock loses value very quickly.

Since the Bail-Ins “worked” well in Cyprus, the practice has been adopted by most Western governments, including here in the US. So, if you have money in an account with one of the Too Big To Fail banks, and there’s another financial crisis, you’re going to lose part or all of your money! Here’s a list of the 29 banks in this category worldwide:

Too Big To Fail Banks

The Sub-Prime loans fell from about $125 Billion in 2007 to $60 Billion by 2009, so everything is under control now, right? No, not right!

The FED’s ZIRP has caused yet another bubble to be blown, this time for Sub-Prime auto loans. These loans have rates around 20%, with loan amounts as high as 115% of the car price. With these, Sub-Prime loans are back up to $120 Billion.

And now, Fannie & Freddie are starting to rev up their loans again, with down payments as low as 3% of equity. Sub-Prime is likely to be a problem again soon.

And all those derivatives, in the 100s of Trillions, are still weighing on the liability side of the Big Banks. With Bail-Ins protecting these financial institutions with your money, you may want to look at that list again and make sure your accounts are elsewhere.

But, you still aren’t in the clear. If you have a pension, there’s a good chance that all your money in the pension fund may be invested in debt of these banks. It’s your money so it’s up to you to find out and tell your pension to stop.

Action Item: Bail-Ins violate the fiduciary responsibility of the financial institutions which benefit at depositors expense.

  • Congress should pass a law, and the President should sign it, outlawing the practice known as Bail-In, returning to the use of bankruptcy proceedings. Bankruptcy should disqualify the managers from continuing at the helm of the institution.
  • Depositors should be returned to the head of the line of who gets their money first in case of a bankruptcy.
  • Managers of financial institutions which use high leverage or risky investments should be held personally liable if those investments go bad.
  • No business should be considered Too Big To Fail. If incompetent managers are allowed to stay in charge as they run the business into the ground, the business should be allowed to go into bankruptcy, an the owners should bear the loss.