What’s The Price Of Gold In The Gold Standard

By Keith Weiner – Re-Blogged From Gold Eagle

Let’s revisit a point that came up in passing, in the Silver Doctors’ interview of Keith. At around 35:45, he begins a question about weights and measures, and references the Coinage Act of 1792. This raises an interesting set of issues, and we have encountered much confusion (including from one PhD economist whose dissertation committee was headed by Milton Friedman himself).

Gold, Paper and Redeemability

Back in the 18th century, three facts were obvious and not questioned. One, gold and silver are money. Two, the paper receipt evidencing the deposit of money is not, itself, money. And three, depositors had the right to get their money back plus interest.

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The Monetary Lessons From Germany

By Alasdair Macleod – Re-Blogged From GoldMoney

Germany suffered two currency collapses in the last century, in 1920-23 and1945-48. The architect of the recovery from the former, Hjalmar Schacht, chose to cooperate with the Nazi successors to the Weimar Republic, and failed. In that of the second, Ludwig Erhard remained true to his free market credentials and succeeded. While they were in different circumstances, comparisons between the two events might give some guidance to politicians faced with similar destructions of their state currencies, which is a growing possibility.

Introduction

Let us assume the next credit crisis is on its way. Given enhanced levels of government debt, it is likely to be more serious than the last one in 2008. Let us also note that it is happening despite the supposed stimulus of low and negative interest rates, when we would expect them to be at their maximum in the credit cycle, and that some $17 trillion of bonds are negative yielding, an unnatural distortion of markets. Let us further assume that McKinsey in their annual banking survey of 2019 are correct when they effectively say that 60% of the world’s banks are consuming their capital before a credit crisis. Add to this a developing recession in Germany that will almost certainly lead to both Deutsche Bank and Commerzbank having to be rescued by the German government. And note the IMF recently warned that $19 trillion in corporate debt is a systemic timebomb, and that collateralised loan obligations and direct exposure to junk held by the US commercial banks is approximately equal to the sum of their equity.

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Money And The Theory Of Exchange

By Alasdair Macleod – Re-Blogged From Goldmoney

Evidence mounts that the global credit cycle has turned towards its perennial crisis stage. This time, the gathering forces appear to be on a scale greater than any in living memory and therefore the inflation of all major currencies to deal with it will be on an unprecedented scale. The potential collapse of the current monetary system as a consequence must be taken very seriously.

To understand the consequences of what is likely to unfold requires a proper understanding of what money is and of the purpose for its existence. It does not accord with any state theory of money. This article summarises the true economic role of money and how its use-value is derived. Only then can we apply the lessons of theory and empirical evidence to anticipate what lies ahead.

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The Ultimate Safe-Haven Asset. A Looming Nobel Prize?

By Arkadiusz Sieroń – Re-Blogged From Gold Eagle

Yesterday, the Nobel prizes in economics were awarded. Unfortunately, gold has been omitted and got nothing. How unfair! But looking at the Dutch central bank press release, gold would have much higher chances if they were the ones granting the prizes and not the Swedish central bank!

2019 Nobel in Economics and Gold

Yesterday was a big day! At least for all those boring economists and similar bean-counters. The Nobel Prize in economics was awarded. Abhijit Banerjee, Esther Duflo, and Michael Kremer became 2019 laureates for their experimental approach to alleviating global poverty.

Nice! But, dear Nobel Committee, we also have great ideas how to reduce poverty in the world. Just give everyone some gold! We know, that’s not the quick road to wealth, but whatever the current outlook, gold portfolios should appreciate substantially in the long run.

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Obvious Capital Consumption

By Keith Weiner – Re-Blogged From Gold Eagle

We have spilled many electrons on the topic of capital consumption. Still, this is a very abstract topic and we think many people still struggle to picture what it means. Thus, the inspiration for this week’s essay.

Enterprise Car Service

Suppose a young man, Early Enterprise, inherits a car from his grandfather. Early decides to drive for Uber to earn a living. Being enterprising, he is up at dawn and drives all day. He finds that he makes a comfortable living. He grosses $250 a day, minus $50 in gas, or $200 net. He works the standard 220 days a year, so he takes home $44,000. Not a bad living.

One day, the transmission breaks. It costs $1,000 to repair. Early has no choice but to pay. He arranges with the shop to get his car back and work it off that week. He does not eat for that week, but he pays and is back to normal.

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Negative Interest Rates Spread To Mortgage Bonds

By John Rubino – Re-Blogged From Dollar Collapse

There are trillions of dollars of bonds in the world with negative yields – a fact with which future historians will find baffling.

Until now those negative yields have been limited to the safest types of bonds issued by governments and major corporations. But this week a new category of negative-yielding paper joined the party: mortgage-backed bonds.

Bankers Stunned as Negative Rates Sweep Across Danish Mortgages

(Investing.com) – At the biggest mortgage bank in the world’s largest covered-bond market, a banker took a few steps away from his desk this week to make sure his eyes weren’t deceiving him.

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40 Years Of Reforms And Gold

By Arkadiusz Sieroń – Re-Blogged From Gold Eagle

The economic development of China is one of the most important events in the history of the world. In an unprecedentedly short time, millions of people have been taken out from poverty. But, as no country has ever developed so fast, that great story raises important worries.

We invite you to read our today’s article about the great progress China made in the last forty years and find out whether it’s too good to be true and it must end with some catastrophe, triggering rally in the gold prices.

One of the biggest risks for the global economy which can materialize this year is the slowdown of China’s economic growth. So, it is wise to analyze the current state of the Chinese economy – its implications for the gold market and what will happen next. As December 2018 marked the forty years of market reforms in China, we will adopt a long-term perspective, explaining how China transformed itself from a poor, backward and isolated country to the world’s economic power. We will examine what the global economy and the precious metals market can expect in China’s fifth decade of reform and development.

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The Cash it Takes to go Shopping in Failing Socialist Venezuela

By Reuters – Re-Blogged From IJR

Jittery Venezuelans on Friday rushed to shops and lined up at gas stations on concerns that a monetary overhaul to lop off five zeros from prices in response to hyperinflation could wreak financial havoc and make basic commerce impossible.

The Wider Image: Venezuelans rush to shops before monetary overhaul

Contagion? Turkey Uses Banks to Halt Lira’s Plunge

By Bloomberg – Re-Blogged From Newsmax

Turkish policy makers made their first move to bolster the financial system and investor confidence amid a plunge in the lira. The currency, stocks and bonds extended their decline.

Promising to “take all necessary measures,” the central bank in Ankara lowered the amount commercial lenders must park at the regulator and eased rules that govern how they manage their lira and foreign-currency liquidity. While there was no mention of higher interest rates, it said all options were on the table.

Image: Contagion? Turkey Uses Banks to Halt Lira's Plunge

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Venezuela’s Annual Inflation Rate Has Reached Over 4,000 Percent

By Sydney Jones – Re-Blogged From https://ijr.com

In 2017, Venezuela’s annual inflation rate rose to 4,068 percent, according to reports made by the opposition-led National Assembly.

According to The Wall Street Journal, the inflation rate has risen so rapidly that the government cannot print money fast enough to keep up with the demand. A U.S. dollar currently is worth more than 200,000 bolivars, the Venezuelan currency.

TOPSHOT-VENEZUELA-CRISIS-ECONOMY-PETRO

Federico Parra/AFP/Getty Images

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“The money is just sitting there…doing nothing for society”

By John Rubino – Re-Blogged From Dollar Collapse

Of all the disturbing side-effects of modern monetary policy, the worst might be the way artificially-low interest rates encourage small savers to take outsize risks. Now governments are starting to insist:

How Denmark Is Trying to Get Savers to Invest in Risky Assets

(Bloomberg) – In the country with the longest history of negative interest rates, an experiment is under way.The minister in charge of Denmark’s finance industry wants savers to shift some of the billions of kroner now in bank deposits over to riskier assets.

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New Thinking And Different Actions

By Gary Christenson – Re-Blogged From http://www.Silver-Phoenix500.com

Hypothetical 65 year old American Male:

Height: 5’10”

Weight: 285 pounds – 120 # overweight

Health: Marginal, with chronic pain and increasingly difficult daily existence

Ask our hypothetical male if he wants to lose 100 # of unnecessary fat, improve his physical health, live 10 years longer, increase stamina, reduce chronic pain, and drive a golf ball 50 yards longer off the tee.

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The Death of Abenomics; the Rise of Interest Rates

By Michael Pento – Re-Blogged From http://www.PentoPort.com

Job approval numbers for Japan’s Prime Minister Shinzo Abe are in freefall. Abe’s support has now fallen below 30%, and his Liberal Democratic Party recently suffered heavy losses stemming from a slew of scandals revolving around illegal subsidies received by a close associate of his wife.

But as we have seen back on this side of the hemisphere, the public’s interest in these political scandals can be easily overlooked if the underlying economic conditions are favorable. For instance, voters were apathetic when the House introduced impeachment proceedings at the end of 1998 against Bill Clinton for perjury and abuse of power. And Clinton’s perjury scandal was indefensible upon discovery of that infamous Blue Dress. The average citizen, then busily counting their chips from the dot-com casino, were disinterested in Clinton’s wrongdoings because the 1998 economy was booming. Clinton remained in office, and his Democratic party gained seats in the 1998 mid-term elections.

Therefore, Abe’s scandal is more likely a referendum on the public’s frustration with the failure of Abenomics.

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Then And Now (Part 1)

By Andy Sutton & Graham Mehl – Re-Blogged From http://www.Silver-Phoenix500.com

Yesterday we had a chance to go on Liberty Talk Radio and talk about what is going on economically. We decided that despite what we felt was a great show, it didn’t even scratch the surface in terms of the differences between how things used to be and how they are now. Particularly disturbing is the relative lack of understanding or willingness to even accept the changes that have taken place by the majority of the population. The latter is called ‘normalcy bias’. It is something ingrained in each of us as a human and either reinforced or stunted by our experiences. We aren’t sure how far down the road of ‘Then and Now’ we’ll get in today’s installment. There may be future installments.

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Inflation Is No Longer In Stealth Mode

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

  • IHS Markit index shows UK households pessimistic about finances for 2017-208
  • UK household finances remain under intense pressure from rising living costs
  • 58 percent of respondents expected higher interest rates in 12 months time
  • Inflation in the United Kingdom currently at near four-year high
  • Prices up prices by 2.9pc year-on-year, biggest annual increase since June 2013
  • In May consumer spending in the UK fell for the first time in almost four years

By a continuing process of inflation, governments can confiscate, secretly and unobserved, an important part of the wealth of their citizens. John Maynard Keynes, The Economic Consequences of the Peace (1919)

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All Roads Lead To The Bubble-City Danger Zone

By Gary Christenson – Re-Blogged From http://www.Gold-Eagle.com

Bubbles always pop, whether they exist in stocks, gold, confidence in the media, belief in central bank omnipotence, real estate, or debt. Yes, it could happen anywhere, and based on history, is likely. This time is not different, unless it will be worse…

From Jared Dillian: “The Everything Bubble”

“Also, nowadays, we have no idea what kind of malignant political forces will be unleashed if we have a real, hard-landing recession …

Does it all get pinned on Trump? Probably.

Does it push the left further left? Probably.

Does it increase the chance of real instability in 2020? Yup.

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Whatever Happened to the Invisible Hand of Capitalism?

By Vitaliy Katsenelson – Re-Blogged From Contrarian Edge

When I was growing up in the Soviet Union, our local grocery store had two types of sugar: The cheap one was priced at 96 kopecks (Russian cents) a kilo and the expensive one at 104 kopecks. I vividly remember these prices because they didn’t change for a decade. The prices were not set by sugar supply and demand but were determined by a well-meaning bureaucrat (who may even have been an economist) a thousand miles away. If all Russian housewives (and househusbands) had decided to go on an apple pie diet and started baking pies for breakfast, lunch and dinner, sugar demand would have increased but the prices still would have been 96 and 104 kopecks. As a result, we would have had a shortage of sugar — a very common occurrence in the Soviet era.

In a capitalist economy, the invisible hand serves a very important but underappreciated role: It is a signaling mechanism that helps balance supply and demand. High demand leads to higher prices, telegraphing suppliers that they’ll make more money if they produce extra goods. Additional supply lowers prices, bringing them to a new equilibrium. I am slightly embarrassed as I write this, because you may confuse me for an economist — I am not one. But this is how prices are set for millions of goods globally on a daily basis in free-market economies.

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Dream Of The Central Banker

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

The art world and artists have in the main not addressed one of the most important issues of our time – central banks foisting debt on the people and nations of the world and thereby controlling them.

An artist who has the knowledge and courage to look at and address the world of money, the dangers of monetary policies today and currency debasement on a scale that the world has never seen before is an Irish artist called Conor Walton.

The Dream of the Central Banker (Click painting to enlarge)

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How Many Euro Crises Will This Make? It’s Getting Hard To Keep Track

By John Rubino – Re-Blogged From Dollar Collapse

Every few years, it seems, one or another mismanaged eurozone country falls into one or another kind of crisis. This leads to speculation about the end of the common currency, which in turn spooks the global financial markets. Then the ECB conjures another trillion euros out of thin air, buys up and/or guarantees all the offending country’s bonds, and calm returns for a while.

At least, that’s how it’s gone in the past.

The latest crisis has more than the usual number of flash-points and could, therefore, be something new and different. Currently:

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Ireland’s Monetary Gold Reserves: High Level Secrecy vs. Freedom Of Information (Part I)

By Ronan Manly – Re-Blogged From http://www.Gold-Eagle.com

This article and a sequel article together chronicle a long-running investigation that has attempted, with limited success to date, to establish a number of basic details about Ireland’s official monetary gold reserves, basic details such as whether this gold is actually allocated, what type of storage contract the gold is stored under, and supporting documentation in the form of a gold bar weight list. Ireland’s gold reserves are held by the Central Bank of Ireland but are predominantly stored (supposedly) with the Bank of England in London.

At many points along the way, this investigation has been hindered and stymied by lack of cooperation from the Central Bank of Ireland and the Irish Government’s Department of Finance. Freedom of Information requests have been ignored, rejected and refused, and there has also been outright interference from the Bank of England. Many of these obstacles are featured below and in the sequel article.

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Economic Consequences Of India’s PM Modi

By Alasdair Macleod – Re-Blogged From http://www.Gold-Eagle.com

Two weeks ago, India’s Prime Minister Narendra Modi demonetised an estimated 86% of rupees in circulation, offering conversion into a bank account or into smaller currency notes until 31 December, after which these notes will have no redemption value.

Together with forgeries in circulation, it could be over 90% of all circulating money. The terms of redemption are so inconvenient for anyone other than black-marketeers that for all purposes $50bn equivalent of rupees have been eliminated from the economy at a stroke, pending the introduction of new currency notes.

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Developing Countries Turn Citizens Into Debt Slaves

By John Rubino – Re-Blogged From Dollar Collapse

One of the big advantages of being a Latin American or Asian country used to be — somewhat counter-intuitively — the lack of credit available to most citizens. The banking system in, say Brazil or Thailand simply wasn’t “advanced” enough to offer credit card, auto, or mortgage loans on a scale sufficient to turn the locals into US-style debt slaves.

But that, alas, is changing as those countries adopt their rich cousins’ worst habits.

Brazil, for instance, was once seen as a Latin American success story and future world power. But then it ramped up government spending and started encouraging its people to become “consumers.” And the rest is familiar, if depressing, history.

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The Night That Is Upon Us And The Dawn Of A New Era

By Hugo Salinas Price – Re-Blogged From http://www.Gold-Eagle.com

A speech by Hugo Salinas Price at the inaugural ceremony of the Fourth Convention of the Association of Mining Engineers, held in the city of Durango, State of Durango, Mexico, on August 25, 2016.

At what point in History does humanity find itself? Where are we? In the course of the past centuries, the study of the physical sciences, born in the 16th Century when the Englishman Francis Bacon established the “Scientific Method”, has had such enormous success and has so greatly influenced humanity, that Science has become a materialist world-religion.

The central problem of our times is that official economists attempt to apply the “Scientific Method” when designing economic policies for governments, and this method is not applicable to human activity. The “Scientific Method” cannot be applied to social concerns, because physical matter and human beings behave in totally different ways. Matter cannot choose, and human beings do choose their behavior. So, while action applied to matter produces predictable results, action applied to human beings must consider the fact that human being do choose, they do have options, and thus their behavior cannot be predicted successfully, cannot be quantified nor expressed correctly in equations. The world’s economists ignore this fundamental fact, and so they formulate economic plans for the State that always turn out as counter-productive, because their plans produce results that are always quite the opposite of what they expected.

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The Inflation Imperative

By Gary E Christenson – Re-Blogged From Deviant Investor

The western welfare states (US, UK, EU etc.) have borrowed more digital currency than can be repaid at current values. The choices are:

Massive inflation: a bad choice

Default: an even worse choice

From Jim Rickards (Strategic Intelligence – Sept. 2016 issue):

“Given the non-sustainability of sovereign debt under current monetary regimes and the necessity for global inflation, there are three possible endgame scenarios facing us now.”

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Record Bond And Stock Prices Sending the Same Message

By Michael Pento – Re-Blogged From http://www.Silver-Phoenix500.com

The S&P500 is trading near an all-time record high. But investors should not take this as the all clear signal. According to most indicators, the market is now more overvalued than ever before.

The Cyclically Adjusted Price to Earnings Ratio analyzes the value of the S&P500 Index with the 10-year average of “real” (inflation-adjusted) earnings as the denominator to determine if the market as a whole is overvalued or undervalued. Today this ratio sits at 26.73, close to the short-term high of 27.2 seen in 2007 and well above its historic average of around 16.

Then we have the Q ratio, developed by James Tobin. This metric takes the total price of the market divided by the replacement cost of all its companies’ assets. The average Q ratio is .68, but the latest estimate of the Q ratio .98.  This suggests that the S&P 500 is currently dramatically above the mean.

Adding to this, the total market cap of U.S. stocks is now 122.5% of GDP. This is the highest level since mid-2000, which was during the NASDAQ bubble. This measure reached its peak at 142%, before crashing back to the more traditional level of just 70% by 2002.

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Life Cycle Of Money

By Mickey Fulp – Re-Blogged From Geologist Musings

In the aftermath of the global economic crisis of 2008-2009, governments throughout the world have fostered a tenuous recovery predicated on massive increases in money supplies and debasement of currencies.

Note, however, that monetary debasement is not a recent phenomenon; it is simply the natural life cycle of money.

There are six well-defined stages in the life cycle of money. This progression has occurred in every dominant civilization over the 5000 years of recorded human history:

Stage 1: A Barter Market Begins.

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How Stupid Do You Have To Be

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

“Of course, there are true copper-bottomed mistakes, like spelling the word “rabbit” with three m’s, or wearing a black bra under a white blouse, or, to make a more masculine example, starting a land war in Asia.” — John Cleese

We all make mistakes, but some are bigger than others. An example of a serious one that’s both potentially catastrophic and easily avoided is to lend money for long periods during a time of rising debt and financial instability. Who, for instance, would commit capital for 30 years to Italy by buying that country’s long-dated government bonds? “No one” is the sane answer, yet those bonds do find buyers.

Even higher on the crazy scale is the following:

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Unsound Banking: Why Most of the World’s Banks Are Headed for Collapse

By Doug Casey – Re-Blogged From International Man

Unsound Banking: Why Most of the World’s Banks Are Headed for Collapse

You’re likely thinking that a discussion of “sound banking” will be a bit boring. Well, banking should be boring. And we’re sure officials at central banks all over the world today—many of whom have trouble sleeping—wish it were.

This brief article will explain why the world’s banking system is unsound, and what differentiates a sound from an unsound bank. I suspect not one person in 1,000 actually understands the difference. As a result, the world’s economy is now based upon unsound banks dealing in unsound currencies. Both have degenerated considerably from their origins.

Modern banking emerged from the goldsmithing trade of the Middle Ages. Being a goldsmith required a working inventory of precious metal, and managing that inventory profitably required expertise in buying and selling metal and storing it securely. Those capacities segued easily into the business of lending and borrowing gold, which is to say the business of lending and borrowing money.

Most people today are only dimly aware that until the early 1930s, gold coins were used in everyday commerce by the general public. In addition, gold backed most national currencies at a fixed rate of convertibility. Banks were just another business—nothing special. They were distinguished from other enterprises only by the fact they stored, lent, and borrowed gold coins, not as a sideline but as a primary business. Bankers had become goldsmiths without the hammers.

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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 Davos Confetti Club

By Michael Pento – Re-Blogged From http://www.PentoPort.com

The Keynesian elite gathered in Davos Switzerland this past week to pontificate on global economic issues and to strategize the engineering of The Fourth Industrial Revolution. This new so called “revolution” includes a discussion on the future of Artificial Intelligence. Judging by the comments coming from most of the list of attendees, it seems obvious the intelligence on display was indeed faux. But the most important take away from this venue was that central bankers have made it clear to the markets that the level and duration of quantitative counterfeiting knows no bounds.

European Central Bank (ECB) President, Mario Draghi, used the platform to assure investors he’ll do whatever further is needed to reach his absurd inflation goal: “We’ve plenty of instruments, said Draghi.” “We have the determination, and the willingness and the capacity of the Governing Council, to act and deploy these instruments.”

Central bankers love to use words like instruments and tools to describe the methods and strategies available to them because it makes what they actually do appear less primitive. But truth be told, the only instrument or tool central banks have is the impious power to create money and credit by decree.

Not to be outdone by the Europeans, Japan’s chief money printer, Haruhiko Kuroda, appeared downright giddy from monetary intoxication when discussing what he refers to as his QQE–Quantitative and Qualitative Monetary Easing program. As if adding that additional “Q” somehow makes it more palatable and effective than the generic form of Quantitative Easing.

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The Fed’s Academic-Based Theories Are Creating A BRUTAL Economic Reality

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

One of the most frustrating aspects of today’s financial system is the fact that the Fed is being lead by lifelong academics with no real world banking or business experience.

Consider the cases of Ben Bernanke and Janet Yellen. Neither of these individuals has ever created a job based on generating sales of any kind. Neither of them has ever had to make payroll. Neither of them has ever run a business. What are economic realities for business owners (e.g. operating costs, capital and profits) are just abstract concepts for Bernanke and Yellen.

Moreover, there is a particular problem with academic economists. That problem is that a major percentage of their “research” is total bunk made up in order to make tenure.

This is not our opinion… it is fact based on research published by the Fed itself.

According to a paper published by researchers from THE FEDERAL RESERVE BOARD, it was not possible to replicate even HALF of the results found in economics papers EVEN WITH THE ASSISTANCE OF THE INDIVIDUALS WHO WROTE THE PAPER.

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The Keynesian Recovery Meme Is About To Get Mugged, Part 2

By David Stockman – Re-Blogged From http://davidstockmanscontracorner.com

Our point yesterday was that the Fed and its Wall Street fellow travelers are about to get mugged by the oncoming battering rams of global deflation and domestic recession.

When the bust comes, these foolish Keynesian proponents of everything is awesome will be caught like deer in the headlights. That’s because they view the world through a forecasting model that is an obsolete relic—one which essentially assumes a closed US economy and that balance sheets don’t matter.

By contrast, we think balance sheets and the unfolding collapse of the global credit bubble matter above all else. Accordingly, what lies ahead is not history repeating itself in some timeless Keynesian economic cycle, but the last twenty years of madcap central bank money printing repudiating itself.

Ironically, the gravamen of the indictment against the “all is awesome” case is that this time is  different——radically, irreversibly and dangerously so. High powered central bank credit has exploded from $2 trillion to $21 trillion since the mid-1990’s, and that has turned the global economy inside out.

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Star Wars Economics

By Tho Bihop – Re-Blogged From http://www.lewrockwell.com

Blowing Up the Death Star Didn’t Destroy Economy, Building It Did

A paper written by Zachary Feinstein discussing the economic consequences of blowing up the Death Star has been making the rounds on social media. While I’m a fan of using Star Wars to teach economics, Feinstein makes a very basic economic mistake in his focus on the Death Star’s destruction.

The paper actually starts out strong. Feinstein notes that, “Economics and finance, much like the Force as explained by Jedi Master Obi-Wan Kenobi, is ‘created by all living things. It surrounds us and penetrates us; it binds the galaxy together.’” Unfortunately, the author shifts from looking at the organic economy towards the dark side of economic models and aggregates – in this case Gross Galactic Product. The paper goes on to outline the quintillions that would be spent in the construction of the Death Star, the estimated size of the galactic banking system and the bailout that would be needed to restore financial confidence after the collapse of the Empire.

While some of the points made are interesting, the paper overlooks that the real economic problem with the Death Star is that a genocidal government built it at all.

I would point both Feinstein (and Emperor Palpatine) to Henry Hazlitt’s Economic in One Lesson. In the words of Hazlitt:

The art of economics consists in looking not merely at the immediate but at the longer effects of any act or policy; it consists in tracing the consequences of that policy not merely for one group but for all groups.

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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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The Economic Pie Is Shrinking!

By Bill Holter – Re-Blogged From http://www.Gold-Eagle.com

No matter how you look at it, the global economic pie is shrinking.  One might be able to argue this is not so based on individual statistical reports issued by various nations.  The problem though is this, many reports do not line up with real world reports.  For instance, how can “retail sales” in the U.S. grow when retailer after retailer reports worse than expected and contracting sales?  The answer is what your own eyes, common sense and of course “individual companies” added together tell you.

On a broader scale, we are told the world is in recovery.  Never mind contraction in Europe or bogus reporting in the U.S., China and elsewhere, “we are in recovery dammit!”.  The best way to look at this fallacy for yourself to divine the truth is to look at trade.  Or better, “trade rates”.  I have mentioned this before, the Baltic dry index has been crashing and now is very close to where it was back in the late 1980’s.

http://www.zerohedge.com/news/2015-11-17/baltic-dry-index-crashes-near-record-low

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Global Fiscal And Monetary Madness

By Michael Pento – Re-Blogged From http://www.Silver-Phoenix500.com

Last week China’s central bank (the PBOC) cut borrowing costs for the sixth time in a year and eased the reserve requirement ratio (RRR) for the third time this year, in a desperate attempt to achieve the prescribed growth target of 7% off the back of ever-increasing credit issuance. The PBOC lowered the one-year benchmark bank lending rate by 25 basis points to 4.35%, the one-year benchmark deposit rate was also lowered by 25 basis points to 1.5%.

In addition to this, the RRR was cut by 50 basis points for all banks, bringing the ratio to 17.5% for the biggest lenders, while banks that lend to small companies and agricultural firms received an additional 50-basis-point reduction to their RRR.

This latest round of easing followed a report showing that despite a surprise devaluation of the yuan in August, economic growth in the third quarter was the slowest in six years. Goldman Sachs Group Inc. estimates the easing will release 600 to 700 billion yuan ($94 billion to $110 billion) into the financial system, keeping borrowing costs at the regime’s all-time low.

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Fed’s Serious Inflation Risks

By Adam Hamilton – Re-Blogged From http://www.Gold-Eagle.com

Traders today universally believe inflation is dead, that there is no persistent decline in the purchasing power of money.  That’s what government price indexes around the world are indicating.  But this false notion is one of recent years’ main Fed-conjured illusions.  Price inflation is the result of rising money supplies, and they have been skyrocketing.  Serious risks are mounting that they will spill into price levels.

As simple as money seems, it is very complex in both theory and practice.  We all understand the idea of working to earn money to buy goods and services.  But the seminal treatise on money, the legendary economist Ludwig von Mises’ “The Theory of Money and Credit” published in 1912, weighed in at 445 pages!  Money is a topic that endlessly preoccupies elite central bankers with doctorates in economics.

Money is ultimately a commodity, its value determined by its own fundamental supply and demand.  If demand exceeds supply for any given currency, its price will rise relative to other currencies.  As this money grows more valuable, it takes relatively less to buy goods and services.  The persistent increase in the purchasing power of money, resulting in a persistent decrease in general price levels, is deflation.

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Britain’s £173 Billion “Debt Timebomb”

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

UK households are sitting on a £173 billion debt time bomb after once again being lured into a spending splurge by banks and credit card companies.

The startling rise in debt levels due to people splashing out on new cars, TVs, conservatories, luxury items, consumer goods and home improvements was uncovered in an investigation by Money Mail.

With a rise in interest rates imminent for the first time in more than eight years, fears are growing that many families will be left struggling with repayments.

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An Interview Worth Watching

cropped-bob-shapiro.jpg   By Bob Shapiro

Michael Pento is an stock market money manager who follows the Austrian School of Economics (as do I). For those of you unfamiliar with what that is, Austrian Economics is Free Market Economics, as opposed to Keynesianism and other names for Socialism.

Michael was interviewed recently, and I’d like to share the video with you. It’s one of the few lucid, straightforward pieces that I’ve seen recently. But, understand that some of what he says is scary, so if you have a bad ticker, you’d better take a pill before watching.

 

Greece Enters Its Crack-Up Boom

By John Rubino – Re-Blogged From http://www.DollarCollapse.com

The Austrian School of economics has a concept called a “crack-up boom” in which a critical mass of people conclude that their government is actively trying to devalue its currency.

Consumers respond by front-running the government, spending their paychecks immediately in order to convert their soon-to-be-less-valuable money into real things. Merchants, not happy about the sudden influx of suspect currency (and sensing the panic of their customers) hold out for ever-higher prices, causing inflation to spike. But it’s a special kind of inflation, driven not by a sudden increase in the money supply but by collapsing confidence among holders of the currency.

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Fed’s Full Normalization

By Adam Hamilton – Re-Bloged From http://www.Gold-Eagle.com

The US Federal Reserve has been universally lauded for the apparent success of its extreme monetary policy of recent years.  With key world stock markets near record highs, traders universally love the Fed’s zero-interest-rate and quantitative-easing campaigns.  But this celebration is terribly premature.  The full impact of these wildly-unprecedented policies won’t become apparent until they are fully normalized.

Back in late 2008, the US stock markets suffered their first full-blown panic in 101 years.  Technically a panic is a 20% stock-market selloff in a couple weeks, far faster than the normal bear-market pace.  In just 10 trading days climaxing in early October 2008, the US’s flagship S&P 500 stock index plummeted a gut-wrenching 25.9%!  It felt apocalyptic, the most extreme stock-market event we’ll witness in our lifetimes.

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Bubbles Never Pop Painlessly

By Michael Pento – Re-Bloged From http://www.Goldd-Eagle.com

Investors are obsessed over predicting the timing of the Fed’s first interest rate hike. Will it raise the Fed Funds rate in September, or wait until next year? But it is far more important to get a grasp on the pace of rate hikes. Will it be a one and done move, or does this mark the beginning of an incremental tightening cycle?  Those of us who are not in the inner circle are forced to only speculate.

But one thing is certain: If history is any guide, whatever they do the Fed will get it wrong.  Most market commentators place unfounded belief in the Fed’s acumen. But the truth is: I wouldn’t trust the Fed to tell me what the weather is going to do in the next 30 seconds–even if they were looking out the window.

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The Beginning Of “The Ending Sequence!”

By Bill Holter – Re-Blogged From http://www.Gold-Eagle.com

This coming week could be very tellingChina just ended a disastrous week and finished just whiskers away from entering bear market (-20%) territory. Credit markets all over the world are weakening and yields are rising.  Greece will not make their June 30 payment(s) and probably go through a referendum to decide whether or not to flip their creditors the bird in a meaningless vote.  In fact, Greece will probably “go boom” this week.  Their banks and stock markets may not open Monday morning.  Two days later, some sort of plan will need to be concocted to classify their bankruptcy as not a “DEFAULT”, otherwise a $3 trillion fuse to a $1.4 quadrillion bomb will be lit!  These and more will be very important “mid-term exams”, any failure will bleed over into derivatives and become “final and terminal exams” with zero chance of a passing grade!

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How Could the Fed Protect Us from Economic Waves?

By Keith Weiner – Re-Blogged From http://snbchf.com

Mainstream economists tell us that the Federal Reserve protects us from economic waves, indeed from the business cycle itself. In their view, people naturally tend to go overboard and cause wild swings in both directions. Thus, we need an economic central planner to alternatively stimulate us and then take away the punch bowl.

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Continued Decline In Money Velocity

By David Chapman -Re-Blogged From http://www.Silver-Phoenix500.com

I’d thought I would show another chart of the velocity of money but from a somewhat different perspective. I last showed a chart on the velocity of M1 in a Chart of the Week – The End of Cash? – April, 30, 2015. This is a chart of the velocity of MZM money stock and prior to 1960 money stock. Money stock is the total amount of monetary assets available in an economy at any specific time. MZM money stock is defined as money with zero maturity. It includes notes & coins, travelers’ cheques & demand deposits, savings accounts and money market funds. MZM is not M1 or M2 but a hybrid of the two plus money market funds.

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Bond Bubble Bust Won’t Cause Great Rotation Into Stocks

By Michael Pento – Re-Blogged From http://www.pentoport.com

For the first time in its country’s history, Portugal sold 6 month T-bills at a negative yield. The 300 million euros ($333 million) worth of bills due in November 2015 sold at an average yield of minus 0.002%. A negative yield means investors buying these securities will get back less money from the government than they paid when the debt matures.

To put this in perspective, the 10 year note in Portugal now yields just 2.38%, down from 18% a mere three years ago. Back in 2012, creditors grew wary of the countries referred to as PIIG’s (Portugal, Ireland, Italy and Greece) and their ability to pay back the massive amounts of outstanding debt. Consequently, creditors drove interest rates dramatically higher to reflect the added risk of potential defaults.

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Suicidal Credit-Based Money System

Bill Bonner wrote a hypothetical college graduation speech which he did not present.  What he would have said included:

“You are heirs to claptrap, nonsense, bogus theories, and trillions of dollars in debt. 

The systems, programs, and institutions your parents set up are mostly worthless scams. Worse, they produce outcomes contrary to their stated goals.

Welfare programs do not help people escape poverty; they keep them mired in it.

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‘Titanic’ Global Economy May “Collapse” Warn HSBC – Gold Is Lifeboat

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

-“The world economy is like an ocean liner without lifeboats …” – HSBC
– Four areas of high risk identified by HSBC
– Risk of stock market crash
– Pension funds and insurers may not meet obligations
– Chinese recession may drag U.S. into recession or depression
– Premature rate rise would expose very fragile global economy
– “There aren’t enough lifeboats to go round”
– Gold vital lifeboat when global ship strikes iceberg

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Switzerland: Ultimate Safe Haven For Liberty, Wealth And Gold

Re-Blogged From Gold Silver Worlds

I am often asked what we would do if, for example, the US comes out with a confiscation order. My reply is: We would do nothing whatsoever! Why? Quite simply, because no one in Switzerland has the political power to execute such an order! Even if Swiss politicians would support such a confiscation order, the Swiss people would likely have the final vote. I am confident that any such confiscation order wouldn’t have any chance to reach a majority in Switzerland, especially when it concerns assets held outside the banking system such as physical precious metals. Even in the unlikely case that it would be accepted, the vote would take at least twelve months, thereby giving the persons affected enough time to move their assets. In my view, this is the main advantage of a direct democracy, it assures that the people and not the politicians in power have sovereignty. The federalist structure of Switzerland additionally guarantees that political power is reduced to a minimum. “Confederation Helvetica” might be the old name for Switzerland, but it is just as valid today as it was in the past.

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Unsound Banking: Why Most Of The World’s Banks Are Headed For Collapse

By Doug Casey – Re-Blogged From http://www.Gold-Eagle.com

You’re likely thinking that a discussion of “sound banking” will be a bit boring. Well, banking should be boring. And we’re sure officials at central banks all over the world today—many of whom have trouble sleeping—wish it were.

This brief article will explain why the world’s banking system is unsound, and what differentiates a sound from an unsound bank. I suspect not one person in 1,000 actually understands the difference. As a result, the world’s economy is now based upon unsound banks dealing in unsound currencies. Both have degenerated considerably from their origins.

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