- How Long Will It Take For The ECB To Own All Sovereign Debt Of Spain, Germany, France?
Submitted by Michael Shedlock via MishTalk.com,
Huky Guru on Guru’s Blog posted a chart that answers the question: How Long Will it Take For the ECB to Own All Sovereign Debt of Eurozone Countries?
At the current rate of purchase of sovereign bonds the ECB will have have purchased all sovereign debt issued by Spain in 9 years and Germany in 8.8 years.
Bond Market Distortion
Distortion in the corporate bond market has picked up since the ECB has started buying corporate bonds.
The above chart shows a comparison between the yields of bonds eligible to be purchased by the ECB and bonds with the same rating in the same sector that are not eligible for the ECB.
Corporate bond yields have collapsed across the board since the ECB’s announcement, but even more so for eligible bonds.
#SellYourBondsToDraghi
- Picking Up the UK Tab
Picking Up the UK Tab
Posted with permission and written by Jeff Thomas, International Man (CLICK FOR ORIGINAL)
Back in the late 90’s, I began saying, “I’ll give the EU twenty years.” At that point, the EU seemed to be going great guns, but I believed that it was an ill-conceived concept that wouldn’t stand the test of time.
There were several reasons for my view. First, I didn’t believe that those countries that were entitlement-focused, such as the Greeks, would ever be as fiscally responsible as, say, the Germans, so the Germans (and other countries where there was a responsible work ethic) would end up subsidizing the Greeks (and to a lesser extent, Spain, Portugal, etc.)
Second, culturally, there was so great a divide between, say, the Austrians and the French, that they could never substantially agree on the union’s laws and directions.
Third, the countries of Europe have been at war with each other countless times over the centuries. They might agree to trade cooperation, but they would never agree to having a former enemy dictate policy to them. And it was baked in the cake that some members would have a louder voice than others and so, would seek to dominate.
In recent years, we’ve watched the EU stumble repeatedly. Invariably, Brussels has arrogantly assumed that it can dictate to all EU members, and offers few apologies for doing so. The individual countries’ leaders then do their best to explain to their own voters why Brussels should be able to behave like an oligarchy, and the voters understandably have become increasingly angry.
Eventually, the wheels were sure to come off the trolley and, with the UK Brexit vote, we’ve witnessed the first major blow to the survival of the EU.
Whilst the “leave” vote has been acknowledged, we should expect to see politicians placing stones in the road to Brexit, in addition to creating repeated delays. It would also not be surprising to see demands for a recall or even a nullification by the UK Supreme Court.
In the midst of this, we’re already seeing the predictable back-pedaling by those politicians and pundits who, up until the vote, were warning that a Brexit would spell unmitigated disaster for Britain. Most of them are now speaking instead of “working on crafting a successful settlement”. (After all, when the sky has failed to fall, they won’t want the public to remember that they ranted like veritable Chicken Littles prior to the vote.)
But, in one sense, the Brexit will unquestionably spell disaster – not to Britain, as was claimed, but to Brussels.
Britain was never fully married to the EU; she was more a “woman on the side,” but in this case, it was the woman that was picking up the tab for the affair. In 2015 alone, the UK paid £13 billion into the EU budget, whilst EU spending on the UK was £4.5 billion. The UK’s “net contribution” was therefore about £8.5 billion – a loss of 65% of its investment. Not money well-spent, considering the trade restrictions heaped on the UK by Brussels.
The £8.5 billion loss, of course, went to support the net-receiver members of the EU, such as the ever-unapologetic Greece.
Most of the above will be common knowledge, but here’s a few pertinent questions that no one seems to be asking – at least not publicly:
At what point does the UK cease to pay into the EU?
Well, Brussels and those UK politicians that support the EU oligarchy concept will wish to delay that eventuality as long as they can. Consequently, we shall witness a struggle within British politics as politicians attempt to appear as though they’re honouring the voters’ edict, whilst finding repeated excuses to delay the Brexit. On the surface, it might not seem that they’d receive significant push-back, but, for those Britons who voted “leave” and, indeed for many who voted “remain,” the idea of Brussels demanding continued annual payment, whilst kicking the UK for choosing to leave, will result in the great majority of Britons becoming more than a little cross. (If we’re going to split the sheets, let’s get on with it. Any discussion of alimony should be a non-starter to say the least.)
Who’s going to pick up the tab when that flow of revenue ends?
Well, now, that really is a puzzler. A large part of the reason why the UK had to be such a significant net-contributor was that most full EU members couldn’t scrape up their “fair share.” Even most of the larger members, such as France, are broke. They can no longer pay their domestic bills, let alone take on more major EU funding.
When all else fails, it typically falls to Germany (the country that was really responsible for the EU’s creation in the first place) to pick up the tab. And it wouldn’t be surprising if Mrs. Merkel were to attempt to sell the idea to the German people that her “Fourth Reich” must come up with the cash, or her dream will fall apart.
Interestingly, Mrs. Merkel enjoyed an increase in popularity after the Brexit vote, after having lost a great deal of support as a result of the refugee crisis. However, once the German people learn that they may be hit with yet another EU bill, her ratings may head south again. She’s up for a fourth term in 2017 and it’s uncertain whether the German people will know by that date how the EU hopes to share out the former UK portion of the EU tab.
Will that impact the continuation of the EU?
The bill will most assuredly go to the remaining net-payer members and, whoever gets handed the tab, the voters in these countries will most assuredly be asking themselves whether they’re facing diminishing returns. Certainly, Germany, France and the UK are presently taking the greatest shellacking. Italy, the Netherlands, Sweden, Austria, Denmark and Finland are also net-contributors. But all the other 19 members are net-receivers.
Certainly, the politicians in these countries share in the EU power and will want to stay in, but their voters who, increasingly, are feeling the squeeze of the unacknowledged Greater Depression may assert themselves at the polling stations, demonstrating that they’re not willing to throw good money after bad.
In the end, the conceptual problems with the EU’s existence may be outweighed by the economic ones. But of one thing we can be fairly certain: should the EU bite the dust in the coming years, the demand for its demise will come from the bottom up, not the top down.
Please email with any questions about this article or precious metals HERE
Picking Up the UK Tab
Posted with permission and written by Jeff Thomas, International Man (CLICK FOR ORIGINAL)
- Paul Craig Roberts: Trump Vs. Hillary Summarized
Authored by Paul Craig Roberts,
The US presidential election this November will tell whether a majority of the US population is irredeemably stupid. If voters elect Hillary, we will know that Americans are stupid beyond redemption.
We don’t know much about Trump, and anti-Trump propaganda rules in the place of facts.
But we know many facts about Hillary. We know about her violation of classification laws and the refusal of the Democratic administration to do anything about it. The Democrats prefer to control the White House than to enforce the law, another nail in the coffin in which the rule of law in the US lies.
We know from their words and deeds and material success that the Clintons are agents for Wall Street, the Big Banks, the military/security complex, Israel, agribusiness, and the extractive industries. Their large personal fortune, approximately $120 million, and the $1,600 million in their foundation, much of which came from abroad in exchange for political favors, attests to the unchallengable fact that the Clintons are agents for the oligarchy that rules America, indeed, that rules the American Empire from Australia and Japan, through North America and Western and Eastern Europe to the Russian border.
We know that Hillary, like Bill, is a liar.
We know that Hillary is a warmonger.
We know that Hillary made the most irresponsible statement ever uttered by a presidential candidate when she declared the President of Russia to be the “new Hitler,” thereby raising tensions between the nuclear powers to a higher level than existed during the Cold War.
We know that Hillary is allied with the neoconservatives and that her belief in the neocons’ ideology of US world hegemony is likely to result in war with Russia and China.
All we know about Trump is that the oligarchs, who sent America’s jobs overseas, who flooded the country with difficult-to-assimilate immigrants, who destroyed public education, who bailed out Wall Street and the “banks too big to fail,” who sacrificed American homeowners and retirees living on a fixed income, who intend to privatize both Social Security and Medicare, who have given the public killer cops, relentless violations of privacy, the largest prison poplulation in the world, and destroyed the US Constitution in order to increase executive power over the American people, are violently opposed to Trump. This opposition should tell us that Trump is the person we want in the Oval Office.
Some claim that it is all a charade and that Trump is playing a role in order to elect Hillary. American politics are so corrupt that anything is possible. However the ruling elites and their puppets seem to be genuinely concerned about Trump’s challenge to their control, and they have united against Trump. They have used their money to buy up “progressive” websites paid to bring the print and TV anti-Trump propaganda onto the Internet, thus joining the Internet presstitutes with the print, TV, and NPR whores who are working overtime to demonize Trump and to elect Hillary.
The entire power structure of our country is behind Hillary. Both Democratic and Republican political establishments and both ideologies, neoliberals and neoconservatives, are united behind Hillary.
How much more evidence do Americans need in order to know that a vote for Hillary is a vote for their own emasculation?
Apparently, Americans remain captives of their insouciance. According to news reports, a majority of voters still haven’t a clue about the consequences of voting for Hillary. Polls report that Hillary is well in the lead. Are these real polls or just another presstitute lie to discourage Trump supporters? Why vote when they have already lost?
The propaganda assault against Trump, vicious as it was, did not succeed during the Republican primary. Despite the media condemnation of Trump, he swept the other Republican candidates aside effortlessly.
The current media demonization of Trump might fail as well. Indeed, it is so transparent that it could elect him.
All that is required is for enough Americans to awake from their insouciance to recognize that it is the enemies of their own lives, their own living standards, and their own liberty who are violently opposed to Trump.
If Americans cannot reach this realization, they have no future, and neither does the planet Earth.
The ruling oligarchy hates Trump because he disavows war with Russia, questions the purpose of NATO, opposes the offshoring of Americans’ jobs, and opposes the uncontrolled immigration that is transforming the United States into a multi-cultural entity devoid of unity. The oligarchs are replacing the United States with a Tower of Babel. Oligarchic power grows exponentially among the disunity of diversity.
In other words, Trump is for America and for Americans.
This is why the oligarchs and their whores hate Trump.
The imbecillic Americans who vote for Hillary are voting for war and their own immiseration.
Possibly, a vote for Trump is the same. However, in the case of Trump we do not know that. In the case of Hillary we most certainly do know it.
Of course, it could matter not how Americans vote. Those who program the electronic voting machines will determine the vote, and as the establishments of both political parties totally oppose Trump, the programmed machines can elect Hillary. We know this from our electoral history. The US has already experienced elections in which exit polls show a winning candidate different from the candidate selected by the electronic machines that have no paper trail and no way of affirming the vote.
If Hillary gets into the Oval Office, nuclear war is likely before her first term is over. A vote for Hillary is a vote for nuclear war.
If you look at the forthcoming election realistically, you have no alternative but to conclude that the entirety of the presstitute media and American Establishment prefers the risk of nuclear war to the risk of losing control of the government to the voters.
That Americans permitted the rise of unaccountable power tells us all we need to know about the dereliction of duty of which United States citizens are guilty. The American people failed democracy, which requires accountable government. The American government has proven that it is not accountable to the US Constitution, to US statutory law, to international law, or to voters.
If the result of Americans’ dereliction of duty is nuclear war, the American people will be responsible for the death of planet Earth. One would hope that with responsibility this great on their shoulders, the American people will reject the unequivocal war candidate and take their chances on holding Trump accountable to his words.
Note: I just heard a NPR report that young people were deserting the Republican Party, had turned leftwing and were flocking to Hillary. So now in America the leftwing candidate is a warmonger and agent of Wall Street! Amazing.
- CNN Cancels Dr. Drew's Show One Week After He Voiced "Grave Concern" For Hillary's Health
One week ago, board-certified medicine specialist, TV personality and CNN employee Dr. Drew Pinsky broke the mold of conformity, when he said that he is “gravely concerned” about presidential candidate Hillary Clinton’s health, pointing out that treatment she is receiving could be the result of her bizarre behaviors.
Appearing on KABC’s McIntyre in the Morning, Pinsky said he and his colleague Dr. Robert Huizenga became “gravely concerned….not just about her health but her health care,” after analyzing what medical records on Hillary had been released. Pinsky pointed out that after Clinton fainted and fell in late 2012, she suffered from a “transverse sinus thrombosis,” an “exceedingly rare clot” that “virtually guarantees somebody has something wrong with their coagulation system.” “What’s wrong with her coagulation system, has that been evaluated?” asked Dr. Drew.
Pinsky described the situation as “bizarre,” and said that Hillary’s medical condition was “dangerous” and “concerning”. Dr. Drew also went on to add that it was a sign of “brain damage” when Hillary had to wear prism glasses after her fall.
Just as stunning as Pinsky’s assessment which promptly went viral and led to the immediate takedown of the original interview webpage by KABC-AM radio, was that it came from an employee of HLN, which is part of the pro-Clinton CNN network.
As such it is probably not surprising that earlier today, just one week later, CNN executive vice president Ken Jautz announced Thursday that “Dr. Drew and I have mutually agreed to air the final episode of his show on September 22.”
“Dr. Drew and his team have delivered more than five years of creative shows and I want to thank them for their hard work and distinctive programming,” Jautz said in a statement. “Their audience-driven shows, in particular, were innovative and memorable TV. And Dr. Drew has been an authoritative voice on addiction and on many other topical issues facing America today.”
“It has been a privilege working at HLN,” Pinsky said in a statement of his own. “My executive producer Burt Dubrow and our outstanding staff and contributors were consistently exceptional. I am very excited to stay within the CNN Worldwide family as a contributor.”
There was no mention of the Hillary fiasco in the official parting statement; it was deemed redundant.
HLN will air reruns of “Forensic Files” and episodes of CNN originals in the “Dr. Drew” 7 p.m. ET time slot.
- Pokemon Go Claims First Fatality; Incites Stampede; But DAU Drop Leaves Hope For Humanity
A few weeks back we wrote about how Pokemon Go had claimed its first fatality in the United States. Now, Japan mourns its first victim, as Yukiko Nakanishi was tragically lost to the addictive game. Nakanishi was crossing the road when a truck struck and killed the 72 year-old hairdresser from Kitayama City. Meanwhile, Keiji Goou, the truck driver, was arrested by police admitting that he “wasn’t looking ahead properly because [he] was playing Pokemon Go.” Per the Tokyo Reporter:
Tokushima Prefectural Police on Wednesday arrested a male truck driver in Tokushima City after one woman was killed and another seriously injured due to an accident caused by his playing of the popular game Pokemon Go while he was behind the wheel.
Keiji Goou, 39, was arrested on reckless driving charges for allegedly hitting two women while playing Pokemon Go on a road in the Katanokamicho area at around 7:25 p.m. on Tuesday, Jiji Press reports (Aug. 24). One woman died in the incident while the other was seriously injured.
Goou has admitted to the charges, telling police, according to the Tokyo Broadcasting, he “wasn’t looking ahead properly because I was playing Pokemon Go.”
Police named the woman who died as Yukiko Nakanishi, 72, a hairdresser from Kitayama City.
Apparently police in Japan have cited 1,000 Pokemon Go players for traffic infractions and recorded 79 Pokemon Go-related traffic incidents in just the past year.
Meanwhile, Pokemon Go players in Taiwan have apparently completely lost their damn minds. The video below recently surfaced on YouTube and allegedly shows a stampede of people running to catch a "Snorlax" (if that actually means anything to anyone reading this).
If all of this leaves you questioning, as we do often, the future of humanity then fear not as Bloomberg reports that the Pokemon Go hysteria may finally be on a down slope. After launching in early July, daily active users of Pokemon Go seemingly peaked just a couple of weeks later around 45mm users and has been steadily declining ever since.
Meanwhile, after surging a mere 2 trillion yen in the first 2 weeks of July, Nintendo's shareholders have finally realized that profits, not mass hysteria, actually drive valuations…well, in the long-run anyway…unless you're the Fed… then the mass hysteria can stretch into the long-term…but that's a story for another post.
- "Things Are Worse" – Dollar Stores' Startling Admission: Half Of US Consumers Are In Dire Straits
If there was any confusion about how the lower half of the US consumer class is doing these days, it was quickly lifted following today’s distressing earnings calls of dollar store titans, Dollar General and Dollar Tree.
Discount retailer Dollar General said it was cutting prices on its most popular items such as bread, eggs and milk, intensifying a price war among already commoditized products with retail giant Wal-Mart Stores to win back falling market share. It shares fell the most on record, plunging by 18% after the company missed on revenue, blaming aggressive competition, lower food prices and reduction in SNAP, or food stamp, coverage in 20 key states.
It’s larger ultra-discount rival Dollar Tree Inc also reported lower-than-expected sales, sending its shares down 10%, the biggest dollar drop decline since going public in 1995.
Dollar General, whose product selection prices are already among the lowest in the country, cut prices by 10% on average on about 450 of its best-selling items across 2,200 stores during the quarter, CEO Todd Vasos said on a conference call. It’s just the beginning: quoted by Reuters, he said the company expects to extend the price reductions to more product categories and markets.
One factor for the declining operations is the aggressive cost-cutting by retail giant, Wal-Mart, which recently reported better than expected results. It now appears WMT solid performance was mostly on the back of margin reductions and major cost-cuts in an attempt to win market share from its lowest-priced competitors. As Reuters notes, Wal-Mart’s strategy of cutting prices has helped the world’s largest retailer to boost sales in the latest two quarters.
“Wal-Mart’s been doing better lately, lowering prices, and that’s been a concern that (it) could impact dollar stores,” Edward Jones analyst Brian Yarbrough said. “Historically, it hasn’t as much but maybe we are seeing something different here.” Retailers are also grappling with a drop in grocery prices, further cutting into margins. Dollar General said prices for milk were down about 8% and for eggs over 50 %.
But the biggest factor by far impacting the performance of both dollar stores was the sharp, adverse turn in the purchasing power of the lower half of US consumers.
Both Dollar General and Dollar Tree said pressures on their core lower-income shoppers contributed to the same-store sales misses that both retailers reported. On today’s conference call, Dollar General CEO Todd Vasos said that he was surprised to admit that while on the surface things are supposed to be getting better, the reality is vastly different for low-income US consumers:
I know that when we look at globally the overall U.S. population, it seems like things are getting better. But when you really start breaking it down and you look at that core consumer that we serve on the lower economic scale that’s out there, that demographic, things have not gotten any better for her, and arguably, they’re worse. And they’re worse, because rents are accelerating, healthcare is accelerating on her at a very, very rapid clip.
Making matters worse, he added that the company’s core consumers base, 65% of which is comprised of lower-income shoppers, has been impacted by the recent reduction or elimination in foodstamps: “now couple that in upwards of 20 states where they have reduced or eliminated the SNAP benefit, and it has really put a toll on [the core consumer].”
He elaborated that the reduction in foodstamps benefits promptly filtered through the entire business model, and culminated with Dollar General being forced to cut prices to remain competitive. This is what he said:
That SNAP benefit reduction and/or elimination happened in April. That was the kickoff, and you could see it immediately in the numbers. So I believe that those are the things that are affecting her today. Again, our core customer, and by the way, we’ve seen this play out before. If you dial the clock back to October of 2013 and coming into November of 2013, when the last large SNAP benefit reduction happened, it happened almost exactly the same way on our comps and in how we saw traffic. Obviously, we’re up at a little higher level at that time, but rest assured, that our traffic slowed tremendously then, very similar to as it did now.
The difference here is we’re going to take aggressive price action to get that consumer back in the store. She needs a little motivation to get back in. We need to help her stretch her budget for a time period until she figures it out. Our core customer is very resilient. They’ll figure it out over time, but they need a little help as they tend to now try to figure out how to make ends meet with less money during the month.
Dollar Tree, which said that fewer than 5% of its customers were SNAP recipients, echoed its competitor when explaining the stress being felt by its own shopper base. As CEO Robert Sasser said on the call, “the consumer is still seeing a lot of pressure on cost increase with rent and just food and healthcare and taxes and all the things. So we see them as still being under pressure. I think that’s the number one issue that we see out there.”
But back to the Dollar General call, where analysts were incredulous and were wondering if the deterioration in spending may have been the result of, wait for it, the recovery and broader consumer improvement, leading to “trading-up” to higher price point competitors. The exchange was amusing:
Q. I understood the issues with SNAP and deflation, but is there a piece of this that’s just related to the consumer job – labor market getting better, so that consumers spending a little bit better and they’re trading up? Is that not possible?
Vasos: I am not going to say, it’s not possible, but we have not seen that in our data. Once again, remember that over 60% to 65% of our sales and consumer base is on that lower demographic area that – of the economic scale. And when you keep that in mind, her life hasn’t gotten any better. And that’s really that customer that we’re serving the most, and that we’re intent on making sure has enough money and enough products inside her house to be able to feed her families.
And then there are soaring healthcare and rental costs:
[The] core consumer, I tell you, has gotten no better as far as her economic well-being. Matter of fact, she tells us, while we’re out in the stores or even through all of our panel data that we do, that while things haven’t gotten a lot worse as far as income coming in, other than the recent SNAP decrease, my expenditures are going up at a very rapid rate.
Healthcare is one of the big ones, because most of our consumers, while she may be working, doesn’t have healthcare, and we all know that she’s having to now pay for this healthcare or be taxed on it, right? So that is starting to really play against that low-end consumer right now, and it will continue to play against her. You couple that with those rents that we talked about, those increased rents are real, and in many parts of where we serve our customer, the affordability and availability of rental units are getting more and more scarce, which is driving up prices. And we’re seeing that because most of our core customers cannot and do not own their own homes.
The punchline:
And when we’re out in stores and we drop prices like we do, I can tell you, I’ve been out in stores in the middle of the aisle and heard customers come up to our store manager in tears and thanking them for being there and thanking them for the prices that we offer in a real convenient nature for her, where she can walk to the store, because she can’t afford anything else. When you hear that, that really brings home where this core customer is.
We wonder if this particular tearful customer would also be accused by the president of peddling fiction.
- Risks Of Loose Money – Exposing The Link Between Monetary Policy And Social Inequality
Submitted by Claudio Grass via GoldandLiberty.com,
It has been almost eight years since former U.S. President George W. Bush warned the world that “ without immediate action by Congress, America could slip into a financial panic and a distressing scenario would unfold.” The government’s response to the crisis was a USD700 billion rescue package that would prevent U.S. banks from collapsing and encourage them to resume lending, which was soon to be followed by a series of Quantitative Easing (QE) packages injecting money into the economy. The rationale of government intervention was to boost spending, restore confidence in the market and revamp economic growth to everyone’s benefit – but did it succeed in doing so?
QE: Faith-based monetary policy
With QE still ongoing (albeit tapered), it is no longer part of a “rescue” package – it has now become the new normal – despite a complete lack of positive results. Since end-2007, the Federal Reserve’s balance sheet expanded from about USD890 billion to more than USD4.5 trillion! And yet, U.S. growth rates have remained in the vicinity of 2% since 2010 (see chart below). Europe is no different. The European Central Bank (ECB), which first embarked on QE in March 2015, raised the monthly amount for asset purchases from EUR60 billion to EUR80 billion, and expanded the range of assets to include corporate bonds – but despite that, the growth outlook remains dim with 1.4% in 2016, and 1.7% in 2017 (source: Bloomberg). So why are governments still clinging to an approach that simply doesn’t deliver?
“All present-day governments are fanatically committed to an easy money policy, ” Ludwig von Mises observed in 1949 in “Human Action”, and to this day, little seems to have changed. Ever since governments, represented by their central banks, monopolized the production of money, and accordingly fractional reserve banking – our markets have never been free from government intervention. Monetary expansion happens all the time, not just in crises. In fact, the world has grown accustomed to this monetary policy, the new normal – and here is why:
“To increase liquidity”, they say, “unemployment is high” or “economic growth rates are lower than expected”, and “inflation is too low”. But as we see in the chart below, the economy hasn’t really improved now, has it?
The false promises of QE – a monopoly only has one winner
Even though Keynesians and other opponents of free market economics say there is no such thing as a “trickle-down effect”, the very assumption of QE is that it will trickle down to revamp the economy by boosting spending. But with low growth rates, weak currencies, and zero-to-negative interest rates, one wonders: who stands to gain from this monetary policy direction?
Our economies have been dominated by the financial sector. Compared to the 1960s, the share of the financial sector has more than doubled from 4% to about 10% today, according to Forbes. This can be attributed to the closure of the gold window back in 1971, where the American administration looked for an easy way to finance its warfare-welfare state. The American citizen was deluded into thinking that the higher spending is because of the better performance of the economy, when in reality the government is printing its way out of the debt burden with an unbacked currency. However, inflation does not affect everyone equally.
There are those who are wealthy and well-connected to the banking system who benefit from inflation, because they are the first to receive the newly-created money. The lower you go down the socio-economic pyramid, the more adverse the effects, as money begins circulating and loses value. The fiat money system in a way protects a certain strata of society: the financial sector (and those connected to it) and central banks. Everyone else, is impoverished by the system, and what is worse, becomes dependent on it.
Also, you will find that those familiar with the system may know what to do to hedge against the risks of any deterioration in the economy and its currency. But others, like middle class professionals and the working class, they just don’t have access to the intricate higher levels of the financial markets. They are more likely to go to the bank to deposit their savings. But even then – the system hits them once again with negative interest rates.
Our system penalizes saving and encourages reckless spending
On the surface, negative interest rates imposed by central banks aim to encourage lending and stimulate spending. But in reality, because banks are required to pay for keeping their reserves at the central depository, they will end up charging money for accounts, lower interest rates on savings, and possibly even deny opening accounts for lower income clients. These will ultimately discourage depositors with limited means of income from keeping money in banks altogether and thereby increase the number of the “unbanked”, which in the U.S. amounts to about 7% of households (about 25 million people). And what if banks do not actually pass on the negative rates on the deposit side? Then, the ironic outcome is that they will end up charging more on loans, by introducing higher fees even on credit cards, or interest rate floors on variable loans, as already seen in German banks (Bloomberg). The whole idea of imposing this policy to make loans easier and cheaper has completely boomeranged and created the opposite effect.
And so, what we are looking at is a flawed system that penalizes saving and encourages reckless spending and printing money. Although we all appear to be stuck in the same environment that combines negative interest rates and price inflation, we have the lower strata of society that is doomed to lose, as they end up spending more, discouraged by negative rates, and instead accumulate debt to keep up with the increasing prices. And then we have the “winners”, who know how to take advantage of the system and thrive in it. Doesn’t that look like entrapment to you? All this is “justified” by a government monopoly on money production. Conversely, are we to assume that a free market environment, free from government intervention, would ensure social equality? The fact is that, realistically, there is no such guarantee, nor was there such a utopian promise ever made. But as my friend Philip Bagus said in a recent interview:
“We should distinguish between morally justified and unjustified inequality. When someone gets rich because he is productive and satisfies the wishes of people in a cheaper and better way than his competitors, we should applaud him. The resulting income inequality is justified. The problem starts if someone earns an income due to government intervention such as licenses, other regulations, or simply tax transfers. The resulting income inequality is unjustified. Getting richer at the expense of others through the use of the fiat monetary system, which represents a government monopoly and banking privileges, is unjust.”
The longer we wait, the worse the hit
The truth is, that our government officials have not solved the problem. They merely prolonged the downfall and generally poisoned the investment environment. If they had really addressed the root causes, they would have left the bubble explode. Yes, it is a harsh experience to endure. Bush wanted to spare his citizens from a great deal of misery – true, but the economy has not exactly flourished since then. In fact, our monetary policy direction has been prolonging the slowdown since 2008. The longer we wait, the worse the hit we will take. We are going from one bubble to another and are just postponing the inevitable. In a normally functioning business cycle we have a boom and bust. Yes, not everyone suffers equally from the bust: the working class is the most vulnerable to recessions. But under our current system, which has stripped them from their savings, they are exposed to greater risks than ever before.
- Jackson Hole Conference Schedule And List Of Attendees Released
The Kansas City Fed has released the schedule of its two day Jackson Hole symposium which, officially kicked off with dinner on Thursday night, hosted by dissident regional Fed president, and dissenter, Esther George (she voted against Yellen’s decision to keep rates unchanged in March, April and July). The highlight is tomorrow’s 10am ET Janet Yellen speech titled “The Federal Reserve’s Monetary Policy Toolkit.”
The speech is important because no matter what Yellen says, the market is virtually assured to surge as Citadel’s momentum ignition algos are greenlighted by the NY Fed trading desk.
Note the symbolic bear in the glass cage on the photo below.
Key highlights: Chair Yellen to give speech Friday morning; panel discussion Saturday with Bank of Japan Governor Haruhiko Kuroda, European Central Bank Executive Board Member Benoit Coeure and Bank of Mexico Governor Agustin Carstens
Outline of the program (all times Eastern):
Thursday:
8 p.m. – Opening Reception and Dinner
Friday
- 10 a.m. – Fed Chair Janet Yellen delivers opening remarks on “The Federal Reserve’s Monetary Policy Toolkit”
- 10:30 a.m. – Adapting to Change in Financial Market Landscape: authors Darrell Duffie and Arvind Krishnamurthy (Stanford), discussant Minouche Shafik, deputy governor at Bank of England
- 11:55 a.m. – Negative Nominal Interest Rates: author Marvin Goodfriend (Carnegie Mellon), discussant Marianne Nessen, head of monetary policy at Sweden’s Riksbank
- 12:55 p.m. – Evaluating Alternative Monetary Frameworks: author Ulrich Bindseil, director of general market operations at European Central Bank, discussant Jean- Pierre Danthine (Paris School of Economics) and Simon Potter, executive vice president at Federal Reserve Bank of New York
- 3 p.m. – Luncheon address by Christopher Sims (Princeton)
- 4 p.m. – Conference adjourns for the day
Saturday
- 10 a.m. – Central Bank Balance Sheets and Financial Stability: author Jeremy Stein, Robin Greenwood and Sam Hanson (Harvard), discussant Randall Kroszner (University of Chicago)
- 11 a.m. – Structure of Central Bank Balance Sheets: author Ricardo Reis (Columbia), discussant Laura Veldkamp (New York University)
- 12:25 p.m. – Overview panel: Bank of Mexico Governor Agustin Carstens, ECB Executive Board Member Benoit Coeure, Bank of Japan Governor Haruhiko Kuroda
- 2:15 p.m. – Lunch
- 4 p.m. – Conference adjourns
- At least 1 Dead, Multiple Injured In Major Explosion At Belgian Sports Complex
A powerful explosion went off just after midnight local time at the Plaine Chalon sports facility in Chimay, Belgium, partially destroying the building and burying an unknown number of people under the rubble, local media report. At least one person is reported dead and four were injured (two seriously) after the building collapsed, Belga News Agency reported citing emergency services spokesperson.
Photos appearing to show the aftermath of the explosion have surfaced on the social media. Half of the building has crumbled as seen on the photo posted by Vince Crate, a local resident. Footage from the scene shows a heavy police presence.
While the cause of the explosion remains unknown, local law enforcement sources told BNO News it appears to a gas explosion. There is no indication of terrorism.
Rescuers are working at the site, and more people are believed to be trapped under the rubble.
#Belgium emergency services expect many more deaths in the #Chimay rubble, unknown if explosion terrorism related https://t.co/dwjaSCTLQt
— Roeland Roovers (@r0eland) August 26, 2016
????#BELGIQUE : Une explosion a détruit une partie du centre sportif du #Chimay. Plusieurs blessés sont à déplorer. pic.twitter.com/wz3bBiSbJN
— (((Lies Breaker))) (@Lies_Breaker) August 26, 2016
UPDATE [26.08-02:32] #Chimay #Vallonia #Belgio #ESPLOSIONE centro sportivo +1 morto #feriti (probabile incidente) pic.twitter.com/C4q7fFD4bN
— Emergenza24 (@Emergenza24) August 26, 2016
Plaine Chalon Sports Complex in Chimay, Belgium
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