Inflation is the Goal… and Central Banks Will Stop at Nothing to Get It!

By Graham Summers – Re-Blogged From Phoenix Capital Research

The markets are prepping for the next massive round of QE.

As I noted earlier this week, NIRP has been entirely ineffective at generating Central Bankers’ desired “inflation.” The ECB has cut rates into NIRP four separate times only to find itself with 0% inflation. In contrast, the Bank of Japan has cut rates once…and has immediately fallen back into a deflationary collapse.

Indeed, NIRP has even been a dud when it comes to pushing stocks higher.

The ECB’s four NIRP cuts have had a minimal impact on boosting EU stock prices: The German DAX is roughly flat since the EU first began implementing NIRP.

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ECB And Shadow Banking

By Alasdair Macleod – Re-Blogged From http://www.Silver-Phoenix500.com

Markets have fully adjusted to a financial world which reflects the leadership and management of money by central banks and are increasingly frightened of any prospect of their control failing. Every time the system stumbles, the response has been for central banks to force greater control and regulation of the monetary system to the detriment of free markets. It is the financial version of the Road to Serfdom. Central banks have become ill-equipped to allow markets to price risk, and in the case of the ECB, it is downright hostile to market-determined prices.

The ECB is a creature of the EU. The EU super-state has legal primacy over the consumer in determining consumer, market and monetary affairs. I was alerted to the full implications of this fact when I recently chaired a presentation of a remarkable paper written by a barrister, Ben Wrench, sponsored by the Institute for Direct Democracy in Europe. Wrench’s paper is worth reading to appreciate its full implications, and it can be found on the IDDE’s website.

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ECB And John Law

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

Last week, the ECB extended its monetary madness by pushing deposit rates yet more negative. It is extending quantitative easing from sovereign debt into non-financial investment grade bonds, while increasing the pace of acquisition to €80bn per month. The ECB also promised to pay the banks to take credit from it in “targeted longer-term refinancing operations”.

Any Frenchman with a knowledge of his country’s history should hear alarm bells ringing. The ECB is running the Eurozone’s money and assets in a similar fashion to that of John Law’s Banque Generale Privée (renamed Banque Royale in 1719), which ran those of France in 1716-20. The scheme at its heart was simple: use the money-issuing monopoly granted to the bank by the state to drive up the value of the Mississippi Company’s shares using paper money created for the purpose. The Duc d’Orleans, regent of France for the young Louis XV, agreed to the scheme because it would provide the Bourbons with much-needed funds.

This is pretty much what the ECB is doing today, except on a far larger Eurozone-wide basis. The need for government funds is of primary importance today, as it was then.

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Marc Faber On Cashless Society Insanity And Why Wall Street Hates Gold

By Mike Gleason – Re-Blogged From http://www.Silver-Phoenix500.com

Mike Gleason: It is my privilege now to be joined by a man who needs little introduction, Marc Faber; editor and publisher of The Gloom, Boom & Doom Report. Dr. Faber has frequently appeared on financial shows across the globe and he’s a well-known Austrian school economist, and an investment adviser. It’s a real honor to have him on with us today. Dr. Faber, thank you so much for joining us.

Marc Faber: It’s my pleasure, thank you very much.

Mike Gleason: Well, I want to start out by asking you about the current state of the financial world here in the early part of 2016. We’ve got the global equities markets continuing to roll over. Meanwhile, the metals are doing quite well and acting as a bit of a safe haven. What do you make of the market action here, so far this year?

Marc Faber: Well, basically, the financial markets have been sick for quite some time. Emerging markets either never made a new high above the 2006, 2007 highs, or they peaked out in 2011, or some even later in 2014. Basically after about February/March 2015, they started to drift. And in the U.S., the indices were strong, but the average stock was down substantially in 2015. This is called weakness beneath the surface of the indices because an index, theoretically, could have 500 stocks and 499 decline, but one stock goes up a lot and drives up the index. So this happened last year, to some extent, in the U.S… you have the strong stocks, Facebook, Amazon, Netflix, Google, and maybe another 20 stocks that were going up. And at the same time, you have thousands of stocks that were acting badly and going down, which accounts for actually a horrible performance for most investors. Now in January, reality set in with the strong stocks, they’re all down 20, 30, and sometimes even more percentages.

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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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Gold Outlook Improves

By Alasdair Macleod – Re-Blogged From GoldMoney

There is a conflation of three related events that materially alter the prospects in favour of a higher gold price. The change in the outlook for US interest rates has probably put an end to the dollar’s four-year bull run, it is clear that there is a growing likelihood of negative interest rates in the future, and the global banking system is no fit state to manage the potential challenges of 2016. This article walks the reader through the likely economic effects relevant to the future purchasing power of the dollar, and therefore prospects for the gold price.

On the 5th February, the price action in gold was significant. At about 9.40AM New York time, a seller dumped 10,000 contracts on the Comex market, worth about $1.2bn. The price fell from $1162 to $1145, a fall of $17. Having risen over the course of the week, it was vulnerable to profit-taking, so in principal it was a good time to take the price down in order to take the steam out of the market. However, from that $1145 level, gold quickly and unexpectedly rose strongly, gaining nearly $30 into the close. Furthermore, the gold price has continued to rise this week.

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Did Japan Just Prove That Central Banks Are Out Of Ammo?

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

The world has yet to fully digest what is currently happening in Japan.

Japan is the global leader for Keynesian Central Banking insanity. The ECB and US Federal Reserve began implementing ZIRP and QE after 2008. The Bank of Japan has been employing both ZIRP and QE since 2001.

Put simply, by the time the Great Crisis of 2008 rolled around, the Bank of Japan had nearly a decade’s experience seeing what QE, ZIRP, and the like could accomplish.

On top of this, the Bank of Japan has been the single most aggressive Central Bank post-2008. In 2013, it launched a single QE program equal to roughly 25% of Japan’s GDP (the Fed’s largest program was less than 10% of GDP).

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Fed’s Stock Levitation Failing

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

The US stock markets just suffered an extraordinary plunge, shocking traders out of their complacency psychosis.  This cast the foundational premise behind recent years’ incredible stock-market levitation into serious doubt.  Traders are finally starting to question whether central banks can indeed manipulate stock markets higher indefinitely.  Any wavering in this faith has very bearish implications for stock prices.

Less than two weeks ago, the US’s flagship S&P 500 stock index (SPX) was up above 2100.  It finished August’s middle trading day just 1.3% below the latest record highs from late May.  At the time, the Wall Street analysts were overwhelmingly bullish and saw nothing but clear sailing ahead.  Predictions for the SPX ending this year above 2250 were ubiquitous, and retail investors were urged to aggressively buy stocks.

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It’s The US Dollar, Stupid!

By Ed Bugos – Re-Blogged From http://www.Gold-Eagle.com

Don’t let the bull-tards tell you the stock market over here is falling because of China’s problems, or Grexit, or fear of the nebulous Fed rate hike. We’ll just see about that last one now anyway!

The US asset bubble is the biggest one on the planet today, and it just went pop. The currency too has rallied over the past few years on the fairy tale that everyone else is inflating while the US is about to tighten, which may have been more plausible if they just started telling it now, and the dollar had not yet gained 65% on the Yen, 35% on the CAD, 30% on the Euro or 25% against a basket of trade weighted currencies -on exactly that story. They have been talking that game for a long time in fact. The worst part about it is that it hasn’t been true, at least not until now. The Fed has expanded money the most in the post 2008 environment -more than the ECB, more than the BOC, BOE, SNB, RBA, and probably more than the BOJ if my suspicions are correct.

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A Common Currency Is NOT A Cause Of Economic Problems!

By Steve Saville – Re-Blogged From http://www.Silver-Phoenix500.com

A popular view these days is that the euro is a failed experiment because economically and/or politically disparate countries cannot share a currency without eventually bringing on a major crisis. Another way of expressing this conventional wisdom is: a monetary union (a common currency) cannot work without a fiscal union (a common government). This is unadulterated hogwash. Many different countries in completely different parts of the world were able to successfully share the same money for centuries. The money was called gold.

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Europe’s Template For Dealing With Crises (Capital & Border Controls) is Coming To The US

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

More and more analysts are beginning to take note of the “War on Cash.” However, they’re missing the fact that the actual template for what’s coming to the US first appeared in Europe back in 2012.

Back in March of 2012, when the EU Crisis first began to spin out of control, then Prime Minister of France Nicolas Sarkozy openly called for the renegotiation of the Schengen Treaty: the treaty that established the 26-nation EU as a “borderless” entity in which individuals could move from one country to another with little difficulty and which also made trade among EU members easier.

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Did The Fed Just Admit to Deep Uncertainty About Our Financial Security In Retirement?

By Daniel R. Amerman, CFA – Re-Blogged From http://danielamerman.com

Generally speaking, the chairperson of the Federal Reserve is treated by the mainstream financial media as being the very paragon of respectability. If the Fed says it – then the voice of economic authority has spoken, and we need to listen carefully.

Yet, recent comments by Janet Yellen have instead made her a source of “controversial” economic ideas, with some financial reporters and their editors apparently feeling a duty to protect their reading audience – and let them know this is not acceptable economic thinking, but rather is “far outside the mainstream.”

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555 TRILLION Reasons Why The Fed Won’t Let Rates Normalize

Guest Post By Graham Summers

The biggest question for investors today is that whether or not rates will rise in 2015.

The Fed may raise rates a token amount this year, but the move will be largely symbolic. With over $100 trillion in bonds and over $555 TRILLION in interest rate derivatives trading based on interest rates, the Fed will not be normalizing rates at any point in the future.

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ECB Head Calls for More Inflation in Europe

In the “Stupid is as Stupid does” category, the European Central Bank President, Mario Draghi, says that Inflation is too low in Europe. He says it’s critical that the ECB act quickly and decisively to raise Inflation.

Forest Gump

I would expect that he didn’t bother asking Europeans buying groceries, and all else they need from their local retail stores, if they agreed that prices should rise more quickly than they have been rising.

This would be funny, except that we Americans are suffering from the same kind of insanity coming out of our Central Bank, the Federal Reserve (FED).