central banks

Central Banks In Panic Mode

usissuescom Foreign Policy, Monetary Policy, Stocks & Commodities , , , , , , ,
By Egon von Greyerz – Re-Blogged From Gold Eagle

In this interview Max Keiser and Egon von Greyerz discuss the enormous pressures in the financial system and the coming stampede into gold. Also:

  • The final phase of the currency race to zero has just started
  • Massive energy in gold, built up over the last 6 years
  • Gold will break its all-time high of $1920, without effort
  • Gold hit new all-time highs in many currencies. Now on its way to at least $10,000 or even $50,000
  • Central banks panicking over global banking system
  • Negative rates – Government bonds, world’s most risky investment
  • At some point, investors will dump overvalued bonds, resulting in hyperinflation and implosion of bond market
  • Dow Jones stock index, will face a vicious fall very soon and in years to come

HERE IS THE INTERVIEW:

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Inflationary Financing And GDP

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By Alasdair Macleod – Re-Blogged From Gold Eagle

We tend to think of a nation’s accounts as being split between government and the private sector. It is for this reason that key tests of a nation’s economic sustainability and prospects for the currency are measures such as a government’s share of a nation’s economic output, and the level of government debt relative to gross domestic product.

While there is value in statistics of this sort, it is principally to give a quick overview in comparisons with other nations. For a more valuable analysis it is always worthwhile following different analytical approaches in assessing the prospective evolution of a currency’s future purchasing power.

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The Yield “Curve” Knows

usissuescom Monetary Policy , , , , , , ,
By Craig Hemke – Re-Blogged From Gold Eagle

As global interest plummets to historically negative levels—and as the U.S. bond market reveals a deeply inverted yield curve—it’s time again to assess what all of this means for the precious metals investor.

Just yesterday, a fellow on CNBC remarked that “no one had seen this coming”. By “this”, he meant a sharp rally in both gold and bonds. Oh really? We write these articles for Sprott Money each and every week.

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Deeply Negative Nominal Rates Are On Their Way

usissuescom Monetary Policy , , , , , ,
By Alasdair Macleod – Re-Blogged From Silver Phoenix

Growing evidence of a severe global recession is sure to provoke more aggressive monetary policies from central banks. They had hoped to have the leeway to cut interest rates significantly after normalising them. That hasn’t happened. Consequently, as the recession intensifies central banks will see no alternative to deeper negative nominal rates to keep their governments and banks afloat through a combination of eliminating borrowing costs and inflating bond prices. It will be the last throw of the fiat-money dice and, if pursued, will ultimately end in the death of them. Gold and bitcoin prices are now beginning to detect deeper negative rates and the adverse consequences for fiat currencies.

The problem

Central banks face a dilemma: how can they cut interest rates enough to stop an economy sliding into recession. A central banker addressing it will note that the average cut required to put an economy back on its feet is of the order of 5%, judging by the experience of 2001/02 and 2008/09 and what their economic models tell them. Yet, in Euroland the starting point is minus 0.4% and in Japan minus 0.1%. In the US it was 2.5% before the recent reduction and in the UK 0.75%. The solution they will almost certainly favour is deeper negative nominal interest rates.

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Keep Your Wealth from Falling Into The Negative Interest Rate Vortex

usissuescom Monetary Policy , , , , ,
By Stefan Gleason – Re-Blogged From Gold Eagle

The world is in the midst of one of the strangest asset bubbles of all time. Instead of being fueled by the hope of bigger and bigger gains, it is being driven by a resignation to incurring lower and lower… and ultimately negative, yields on capital.

This summer, the global inventory of bonds yielding less than zero reached a record $13 trillion.

Negative yielding instruments are concentrated mainly in Europe and Japan, where they have spread from sovereign to corporate issuances. Now even some “junk”-rated bonds are teetering around 0%.

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Negative Interest Rates And Cash

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By Bart Klein Ikink – Re-Blogged From Gold Eagle

Is it possible to have cash with negative rates?

War on cash?

There is talk about a war on cash to pave the way for negative interest rates. Negative interest rates and cash go not well together, at least so it seems. People may opt for cash when interest rates on bank accounts and government bonds are negative. In Europe many interest rates are already in negative territory but the central bank still promotes the use of cash. So is there a war on cash? At least not at the European Central Bank (ECB) it seems. Some ECB policy makers can even get a bit emotional about cash being the only real link between the central bank the people.1

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Why Jim Grant Thinks It’s Time to Abolish The Fed

usissuescom Monetary Policy , , ,
By Rick Ackerman – Re-Blogged From Gold Eagle

[Jim Grant is an old-school observer of this economic age and one of its most brilliant commentators. Following is the speech he gave in accepting the 2019 Bradley Prize, which recognizes those who have helped further the principles and institutions of American exceptionalism. RA]

Ladies and gentlemen, it’s a blemish on the age that so many of us know the name of the Federal Reserve chairman. In a better world, that government functionary would be as obscure as what’s-his-name, the home plate umpire who got no arguments calling balls and strikes at Yankee Stadium the other night. Who elected the Greenspans, Bernankes, and Powells to be the arbiters of interest rates, asset prices, the rate of inflation and who knows what else? It wasn’t Alexander Hamilton. Nor was it the Fed’s own founders. If the authors of the 1913 Federal Reserve Act could return to earth to inspect their handiwork, the shock might kill them all over again.

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