By John Rubino – Re-Blogged From Dollar Collapse
A quick recap of the past couple of months:
Stocks plunge.
The politicians, bureaucrats and bankers who depend on artificially-elevated financial asset prices start to panic.
The Fed announces that maybe it won’t have to raise interest rates any more, and the president announces a truce in the trade war with China.
By John Rubino – Re-Blogged From Dollar Collapse
In the next downturn (which may have started last week, yee-haw), the world’s central banks will face a bit of poetic justice: To keep their previous policy mistakes from blowing up the world in 2008, they cut interest rates to historically – some would say unnaturally — low levels, which doesn’t leave the usual amount of room for further cuts.
Now they’re faced with an even bigger threat but are armed with even fewer effective weapons. What will they do? The responsible choice would be to simply let the overgrown forest of bad paper burn, setting the stage for real (that is, sustainable) growth going forward. But that’s unthinkable for today’s monetary authorities because they’ll be blamed for the short-term pain while getting zero credit for the long-term gain.
By Michael Pento – Re-Blogged From http://www.Gold-Eagle.com
Raise the Inflation Target and Put a Date on It! That’s the direction some high-profile economist and former members on the FOMC want to go. According to these academics, including Narayana Kocherlakota the former president of the Federal Reserve Bank of Minneapolis from 2009 to 2015, raising the inflation target just isn’t enough. They want to put a time horizon on it as well. In other words, they want to raise the inflation target higher than the current 2% level, and then place a firm date as to when that inflation goal must be achieved.
Their rational for doing both actions is to reduce the level of real interest rates, which they somehow believe is the progenitor for viable GDP growth. You see, once the Fed has taken the nominal Fed Funds Rate to zero, there isn’t much more room to the downside unless these money manipulators assent to negative nominal interest rates. But charging banks to hold excess reserves is fraught with danger, and so far this idea has been eschewed in this country and has been proven ineffectual in Europe.
By Michael Pento – Re-Blogged From http://www.PentoPort.com
Fed Head Janet Yellen is keeping alive the tradition of her predecessors, Messrs. Greenspan and Bernanke, by showing she is equally as blind-sighted to the bubbles central banks are blowing in the bond and equity markets. During her September press conference, Ms. Yellen stubbornly clung to the misconception that it is only possible to tell if a bubble exists after it bursts. And because of this delusion, in Yellen’s eyes ninety-six months of a virtual Zero Interest Rate Policy (ZIRP) is merely, and I quote, “a modest degree of accommodation.” Her blinders are so opaque that she claims to see, “no signs of leverage building up.” And her feckless ability to spot market imbalances even resulted in this doozy of a Yellen quote: “In general, I would not say that asset valuations are out of line with historical norms.”
Can it really be the case that the woman who holds a dictatorship on the cost of money, which is the most important price signal in an economy, is unaware that the stock market is at a level that is virtually the most overvalued in history? The Median P/E, Price to sales and Total Market Cap to GDP ratios all show that the equity bubble is about as far detached from economic reality than at any other time in history. For example, the market cap of equities in relation to the size of the economy is over 70 percent points higher than the level experienced from 1975-1990.
By Andrew Hoffman – Re-Blogged From http://www.Silver-Phoenix500.com
(September 26, 2016) It’s early Monday morning, on what could not only be a historically bad week for global financial markets, but the “beginning of the end” of the manipulated worldwide perception that “everything’s OK.” Most of the world’s 7.4 billion denizens know this already, having watched their savings, currencies, standards of living, and political and/or social stability decline substantially since the 2008 financial crisis. Which also goes for the majority of Westerners, I might add. However, Western “intervention operatives” – like the PPT, ESF, Fed, and gold Cartel – have been more successful at manipulating markets to defer such perception. Moreover, having the world’s reserve currency enables the inflationary hell the vast majority are experiencing; and in some cases, like Venezuela, hyperinflation; to be temporarily averted, in lieu of a more gradual, “frog-in-a-pot” type syndrome. This is why gold, in the “average currency,” is trading at, near, or in many cases well above previous all-time highs. Which of course the “evil Troika” of Washington, Wall Street, and the MSM won’t dare discussing, in their cumulative desperation to have you believe the PPT-supported, “record-high” Dow Jones Propaganda Average is indicative of a stability that simply does not exist.
By Andrew Hoffman – Re-Blogged From http://www.Gold-Eagle.com
It’s Thursday morning – and there are nearly a dozen “PM bullish, everything-else-bearish” headlines worthy of distinct articles. Such as…
1. This shocking, and hilarious, segment of the John Oliver show, depicting how subprime auto lending has officially reached the destructive lunacy of the 2007-08 subprime mortgage market. Not to mention, subprime student lending, as a whopping 37% of the $1+ trillion, government-underwritten student loan “market” is now delinquent.
2. Obamacare is literally on the brink of collapse, with insurers losing $2 billion in 2015 alone, and pulling out of the program en masse
By David Stockmn – Re-Blogged From Stockman’s Contra Corner
The inexorable effect of contemporary central banking is serial financial booms and busts. With that comes increasing levels of systemic financial instability and a growing dissipation of real economic resources in misallocations and malinvestment. At length, the world becomes poorer.
Why? Because gains in real output and wealth depend upon efficient pricing of capital and savings, but the modus operandi of today’s central banking is to deliberately distort and relentlessly falsify financial prices.
After all, the essence of ZIRP and NIRP is to drive interest rates below their natural market clearing levels so as to induce more borrowing and spending by business and consumers.
It’s also the inherent result of massive QE bond-buying where central banks finance their purchases with credits conjured from thin air. The central banks’ big fat thumb on the bond market’s supply/demand scale results in far lower yields than real savers would accept in an honest free market.
