EU Monetary And Economic Failures

By Alasdair Macleod – Re-Blogged From Gold Eagle

Introduction and summary

The monetary, financial and political weaknesses of the EU are about to be exposed by the forthcoming global credit crisis.

This article assumes the combination of end of credit cycle dynamics and the rise in trade protectionism in 1929 is a valid precedent for gauging the scale of a developing global credit crisis today, as described in my earlier article published here. Then, it was heavier tariffs coinciding with a less destabilising inflation cycle than we face today, a combination that saw stock markets collapse. Today, we have the additional factors of far greater monetary inflation, far higher levels of government debt, low savings coupled with record consumer borrowing, and unbacked fiat currencies likely to lose purchasing power instead of gold-backed currencies which increased their purchasing power.

Declining international trade has already become evident in only a few months, and prescient observers detect early signs of a rapidly developing global recession. In response, the ECB has announced it will target lending to non-financial businesses with its TLTRO-III programme from September onwards.

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33AD: The Year the House of Maximus And Vibo Went Bust

By Mark J Lundeen – Re-Blogged From Gold Eagle

This was a constructive week for the Dow Jones, up 1.49% in the BEV chart below.  That doesn’t sound like much; but remember low volatility in the stock market is when the Dow Jones does the thing the bulls like most – advance towards new all-time highs.

A few more weeks of this and we’ll see the Dow Jones once again at the red BEV Zero line.  But don’t be surprised if it doesn’t happen until later in the year.  I don’t expect the Federal Reserve wants to ignite another feeding frenzy in the stock market; they have problems enough to cope with as it is.

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Fiat Money Quantity Update

By Alasdair Macleod – Re-Blogged From Gold Money

The fiat money quantity is comprised of fiat money both in circulation and available for circulation, being parked at the central bank in the form of the reserves of depository institutions. The expansion of US$ FMQ since 1960 is shown in the chart below.

Before the great financial crisis of 2008/09, FMQ expanded reasonably consistently at an average annual rate of 5.9%, shown by the pecked line. Excess reserves were virtually non-existent and required reserves were at little more than $10bn. Following the Lehman crisis, quantitative easing led to the accumulation of excess reserves as depository institutions sold bonds to the Fed and had their reserve accounts credited with the proceeds. Consequently, FMQ increased at a significantly faster pace than its long-term trend, leaving it $5,386bn above the pre-Lehman crisis trend at the end of last year.

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President Trump’s Trade Tantrum Triggers Slump

By Alasdair Macleod – Re-Blogged From Silver Phoenix

For decades, Western governments have been pursuing a policy of transferring wealth from the public to themselves, their licensed banks and the banks’ favoured customers by means of interest rate suppression and monetary inflation. Consequently, inflation of financial asset prices has benefited the financial sector to the detriment of those employed in the productive economy. Over time, this has badly weakened productive capacity and the long-term ability of the market economy to fund future government spending.

It is a situation which seems bound to eventually lead to major economic and monetary problems. Additionally, global economic prospects have worsened considerably as a result of President Trump’s tariff wars against China and others. Empirical evidence from the 1930s as well as economic analysis illustrate how trade tariffs have a devastating effect on domestic economic activity, a prospect wholly unexpected by today’s economists.

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Rising Interest And Prices

By Keith Weiner – Re-Blogged From Gold Eagle

For years, people blamed the global financial crisis on greed. Doesn’t this make you want to scream out, “what, were people not greedy in 2007 or 1997??” Greed utterly fails to explain the phenomenon. It merely serves to reinforce a previously-held belief. Far be it from us to challenge previously-held beliefs (OK, OK, we may engage in some sacred-ox-goring from time to time), but this is not a scientific approach to explaining observed events. To properly understand a crisis, you have to look for the root cause. And if the crisis did not occur previously, your theory needs to explain why not then, and why only now.

Suppose an old company, XYZ, goes out of business. “Times change,” people say, to explain an economic phenomenon. Or, perhaps slightly less imprecisely, “the market changed.” Sometimes they’ll get even closer to saying something. They say, “Company XYZ did not adapt to changes.”

These statements are copouts.

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Liquidity, Money Supply And Insolvency

By Andy Sutton – Re-Blogged From Silver Phoenix

Liquidity is becoming of central importance once again. It is frequently mentioned in mainstream media articles, interviews, and ‘educational’ programs.  It was a central point of discussion during the financial market blowout in 2008.

The killing off of a little-known (until it was dead!) data series earlier this year by the not-so-USFed has gotten the beehive buzzing once again about a liquidity crisis – or the possible aversion of one in the short term. It has also gotten things buzzing about the longer term as well.

What Happened

Late in 2017, the St. Louis Fed stopped publishing interbank loan data. Period. Just prior to that, the amount of interbank loans on a weekly basis dropped to zero:

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Moore’s Law Has Replaced The Gold Standard

By George Smith – Re-Blogged From Gold Eagle

I collect gold in the form of important insights, and in this article I’d like to share some of them with you.

Until a few years ago I never thought of Moore’s Law and a gold coin standard as having an important connection, but they do.  Gary North lays it out (8/17):

The gold standard was an institutional restraint on the expansion of government spending, and central banks were designed to thwart the gold standard. We live in an era of the triumph of central banking. We therefore live in an era of the comprehensive defeat of gold coins as restraining factors on the expansion of the government.

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