PIMCO On Central Planning And "Financial Repression" By Central Banks To Keep Rates Low

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Mon, 06/20/2011 - 12:42 | 1385128 Ahmeexnal
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We also see opportunity in emerging market currencies, which we expect will appreciate vs. currencies of developed nations.


Sure enough, when India rolls out silver currency, you can say goodbye to "developed nations" crap currencies.

Mon, 06/20/2011 - 13:20 | 1385230 Steroid
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India has government, too. And She also has a central bank.

This system continues till it doesn't, then every country is out for itself. That will be the time when PM beats cutting zeros on the competing confettis. Before that, with a transition, you will only loose your PM reserves.

India, China, Malaysia or Mexico? It will not come from their central banks but from grassroot. In this sense, the US will be the last (unless the FED is abolished). Even Europeans still remember their currency collapses. For the rest of the world it is an every day event. The US did not have it since the civil war. They will happily kick the can and enjoy it tremendously. They will even rename the dollar to goldar just to suck out all the life of whoever volunteers to use it as a reserve currency. And after the last one fallen, it is payback time!

Mon, 06/20/2011 - 16:10 | 1386151 TruthInSunshine
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Barely OT (maybe not OT at all):

The one minute video proving Bernanke's legally perjured himself:

  Bernanke Impeachment
Mon, 06/20/2011 - 14:21 | 1385555 trav7777
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Mon, 06/20/2011 - 12:45 | 1385136 RobotTrader
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Wow, biggest money printing racket ever, sub 3% on the 10-yr., short term rates near zero, and they cannot even get inflation going with the CRB waffling around near the lows today, GDX/GLD ratio near world record lows.

Simply amazing stuff, seems like we should be having 9% inflation and gold going through the roof and bond vigilantes screaming but instead we get record low interest rates.

Mon, 06/20/2011 - 12:54 | 1385147 Boston
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GDX/GLD near record lows?


Looks like it's heading straight back DOWN to the true recent lows....back in late 2008.


Uh, oh.

Mon, 06/20/2011 - 12:59 | 1385169 Corn1945
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Do you...uh...actually buy gas or food? I am guessing the answer is "no" based on your "no inflation" nonsense.

Mon, 06/20/2011 - 13:04 | 1385173 Atomizer
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Just over at the Daily Bail.

@davids11131113 It is , it's robotrader at a early? age.

dispersingweight 1 week ago




Mon, 06/20/2011 - 13:02 | 1385179 lieutenantjohnchard
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robottrader: the ultimate dumb money indicator.

Mon, 06/20/2011 - 13:03 | 1385184 kito
kito's picture

robottrader--dont forget that the dow is back up screaming past 12,000. still waiting for that crash that was supposed to begin last month. where is that qe3???  our gloom and doom friends are going to be waiting quite some time.........

Mon, 06/20/2011 - 13:12 | 1385213 lieutenantjohnchard
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you must have missed robottrader's memo. he said he shorted the market with both fists once 1300 s&p broke down. he's supposedly all short. no later than last night he said the bears were gonna rumble. hopefully you don't take the fraud poster known as robottrader seriously.

Mon, 06/20/2011 - 15:07 | 1385795 css1971
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Dow down ~7%, FTSE similar.

I'm certainly not willing to step back in at this point. You go right ahead.

Mon, 06/20/2011 - 13:21 | 1385238 Harlequin001
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Yes , 'Simply amazing stuff, seems like we should be having 9% inflation and gold going through the roof and bond vigilantes screaming but instead we get record low interest rates.' and it only took nearly 3 trillion to do it. Amazing don't you think...

Mon, 06/20/2011 - 13:07 | 1385139 baby_BLYTHE
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Mon, 06/20/2011 - 12:47 | 1385142 Don Quixotic
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Can we consider the recent Dodd-Frank PM rules to be yet another subtle method for financial manipulation or is it too early to tell either the intent or actual consequences of the new rules?

Mon, 06/20/2011 - 12:58 | 1385158 Ahmeexnal
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One of the reasons is they need to steer money into the stock markets when QE2 stops.

So they come up with a boogey man to try and scare PM traders.  Like PM traders -who know the stock markets are a fraud- would jump from the pan into the fire. I'm telling you, these Wall Street hoodlums think they are trading like its 1999. They have no connection with reality and think everyone else has multimillion bonuses like them.  The money will not go into the stock markets. It will go into PHYSICAL.

Mon, 06/20/2011 - 12:55 | 1385148 vegas
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I wouldn't buy US treasury paper if you gave me the money. US is bankrupt. Open an account somewhere in Yuan, or maybe SKD. 5 years from now you will look like a genius.

Mon, 06/20/2011 - 13:03 | 1385183 Ahmeexnal
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Mon, 06/20/2011 - 13:07 | 1385195 baby_BLYTHE
Mon, 06/20/2011 - 15:11 | 1385808 Cleanclog
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Debt Saturation   http://bit.ly/kqFBzR

Mon, 06/20/2011 - 13:11 | 1385196 Long-John-Silver
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I am a genius. I purchased Gold @ $700 and Silver @ $12. My family was not so sure of my genius status at the time having liquidated my G-Fund account and incurring large tax penalties at the time. Today the Treasury is raiding the G-Fund and will drain it completely by 2 AUG this year, Gold is $1540, and Silver is $35.87.

Mon, 06/20/2011 - 14:09 | 1385508 kito
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youre a genius if and when the bond vigilantes turn on the united states, causing an economic collapse, in turn causing a gold standard to be reinstated. until then, youre making money on an investment.


Mon, 06/20/2011 - 14:28 | 1385592 firefighter302
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"I am a genius".  Long-John-Sliver




Mon, 06/20/2011 - 13:12 | 1385200 PlausibleDenial
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Mon, 06/20/2011 - 12:59 | 1385168 JimBobOMG
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What is EM?

Mon, 06/20/2011 - 13:25 | 1385257 GeneMarchbanks
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I believe EM= emerging markets. You're a sweet boy you should visit here more often.

Mon, 06/20/2011 - 13:26 | 1385260 Ahmeexnal
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emerging markets (BRIC)

Mon, 06/20/2011 - 13:06 | 1385180 ShankyS
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Examples include requirements to hold minimum
amounts of government debt on bank balance sheets or establishing
minimum requirements for government bonds in pension funds.

I'm assuming these "safe" levels will be moving soon enough like the "safe" radiation scales around the globe.


Mon, 06/20/2011 - 15:06 | 1385788 Shell Game
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Debt ceilings, Fuku safe levels, minimum requirements... The pen is indeed mighter than the sword.


Mon, 06/20/2011 - 13:11 | 1385209 BayAreaAlan
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Why am I afraid when someone mainstream starts saying the system is broken.

Mon, 06/20/2011 - 14:55 | 1385741 topcallingtroll
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Bill Gross is not mainstream.

He is an iconoclast, an opportunist, a liar, ugly as sin, a good writer, but he is definitely not mainstream.

I have no doubt he owns gold but cannot broadcast the fact or it might hurt business.

Mon, 06/20/2011 - 13:14 | 1385216 buzzsaw99
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I didn't hear them bitching while the fed was buying all their agency bonds at top dollar.

Mon, 06/20/2011 - 13:18 | 1385223 Catullus
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Let it be known. If you loan money to people whose only source of income is robbing others or counterfeiting, don't surprised when those same people stiff you in some way. If the entire financial system is marketing their risk-adjusted curves to the likelihood of thugs repaying their debt, then to hell with this system. Mark your curves to something less risky and move on. It's not the end of the world. It's not the apocalypse. It's just changing how you perceive risk and returns.

Mon, 06/20/2011 - 13:21 | 1385251 Downtoolong
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Investors should be wary of financial repression because it is primarily a tool to redistribute wealth from creditors (citizens) to debtors (governments) to the detriment of creditors, fixed income investors and savers."

Exactly what I said in three posts last week, though I would include all debtors in the latter group, not just governments. I realize this is nothing new or special; everyone else knows it too.

I also said I hate it when I end up agreeing with Bill Gross and his bunch. Shit, next thing you know I'll be moving back to California.

Mon, 06/20/2011 - 13:38 | 1385317 stiler
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It's not the end of the world. It's not the apocalypse. 

I agree, but it might be more than dollars & cents.

Mon, 06/20/2011 - 13:49 | 1385389 kevinearick
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Time, Currency, & the Rush Hour Perspective

The Problem:     It’s about the process of designing the process, which results in exponential derivative outcomes. Only reptiles attempt to catch the curve by addressing the aggregate symptoms of individual outcomes by blaming the individual. The NPV window / value / wealth / currency (voltage) depends entirely upon trust for timing, and reptiles breed competition, eliminating trust. Welcome to the Boeing catch-22, Microsoft.

In order to prime the pump, a cohort of kids must be brought up through the new process to prove it works, so others will follow, which will take 30 years, assuming the process is ready, but, in a little over a month, the reptiles are going to “see” that the best the dollar can do is gain traction on other currencies imploding into the black hole of bankruptcy.

Methodology:   The universe is a black hole of black holes, with a composite neutral line serving as a relatively instantaneous communication bus. From the long-term perspective, it’s a pendulum; from the short-term perspective, it’s a bridge.

The old radio knob was continuous; the old tv knob was discreet. A dc signal can by piggy-backed on an ac signal, with the remainder going to the quantum neutral of neutrals. The education system trains in dc; you are born, you grow old, and you die, but you can just as easily see it from the reverse perspective. We call those ascribing to the latter kids with old souls and old people young at heart. When these types bond, it begins the priming process. They are always on the event horizon and they can affect time rather than simply having it affect them.

The kid is building the foundation with the old person in mind, and the old person is trimming out with the kid in mind, which induces the semi-neutral middle class. Parallel circuits are an illusion created by time. The more things change, the more they stay the same is another way of saying that physics is physics.

Analogy / Angle of Perspective:       The reptiles herd their prey into the hour to create a bottleneck, “rewarding” the competitors on the front end of the ponzi, capturing the rest, and catching the front end on the next iteration. To solve loss of circulation, you want people to slow down to 40 mph, to temporarily cooperate, and maximize throughput until capacity is increased QUANTUMLY.

If you have a fast timed camera / meter, you will capture the pendulum swing. If you have a slow “income meter,” which averages, smoothes, and extrapolates, you will capture a dc average. From one perspective, you have many channels. From another, you have one channel and each class viewer has a filter to view the desired sub-channel. The universe is a tuner of tuners, which creates time in the process of installing filters, or creates filters in the process of establishing time.

On the first pass across the organization’s floor, an architect has 95% of the channels tuned and the bottleneck identified. All that is left is to design the irrational energy to be imparted upon the existing irrational energy, like multiplying a negative by a negative, only dimensions. The architect broadcasts on the required channels to ensure placement at the bottleneck (feedback loop of feedback loops). Due to the ego of egos, the architect’s participation will soon be discounted upon departure, like an old memory.

 The automated line has to be aligned along the new direction for the to-be. In the as-is, the demand for variability naturally increases, but the line is general use, so the “errors” increase, resulting in processor timing errors. Humans are specifically designed to transform error demand into supply, by practicing errors, but the endgame of currency exchange forgives the dc machine while blaming the ac human, in a temporarily symbiotic relationship between agency and senior labor, with a ponzi TBTF entitlement system and a revolving door for junior labor, until the irresolvable crash, when the new facility is brought online and the process is re-initiated. Under equilibrium condition, however, a dc solution is not possible. The Mayans could evade the Internet.

The architect repeats an individual error within firm tolerance until backlash builds to the required threshold, “tuning in” all the systematic errors up the chain of command, while making prototypical corrections to the process, which will only clear the bottleneck on the last insertion (compilation of the wave). The filters will automatically tune in the individual error until design change is complete. An architect builds a prototype of prototypes, keeping the pieces in a mental closet.

The Turner Diaries Media Manipulation Model:                 Class identification, goals, funding, recruiting, media, proto-action, action/word positive feedback cycle. Just add channels and you have reptile herding of the sheeple. A dinosaur cannot change its spots in real time.

The reptilian mind cannot solve a problem it doesn’t recognize, so it becomes a hammer looking for a nail. Fiat money may only control the make-work economy, by measuring quantity. Only you can judge quality, which is the difference between a thinking human and a replicating reptile. From time to time, an architect appears to be any number of critters.

… another white elephant bytes the dust, because a quantum solution is required.

Architects have an acute sense of leverage. The art is in taking all the resulting energy and producing any productive outcome to balance the neutral line. The fusion/fission reactor is there; what others do with it is up to them, but they should not attempt to isolate the architects with Family Law. Only their virtual image resides within the box.

Thu, 06/23/2011 - 08:15 | 1394145 tip e. canoe
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"Fiat money may only control the make-work economy, by measuring quantity. Only you can judge quality, which is the difference between a thinking human and a replicating reptile."

this is a very important point.   quantity vs. quality is the essence of the rift that is tearing open like a canyon.   as always, water is the key element here. 

Mon, 06/20/2011 - 14:17 | 1385539 LawsofPhysics
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"The key is what happens to inflationary expectations. With four decades of experience, we have observed that bond markets do not move on higher headline inflation unless investors believe the higher inflation will be sustained. And that is why we look at core, which excludes volatile food and energy prices. Core reflects everything else going on in the economy,..."


This is why modern economics fails, exclusion of food and energy costs.  Hey idiots, nothing else happens in the economy without energy.  Even robots won't work on your assembly line without power.  Unfortunately, this is one lesson I know first hand.

Mon, 06/20/2011 - 14:50 | 1385704 topcallingtroll
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True, but if energy is only ten percent your cost of production and labor is 50 and capital costs are 40 percent you can find ways to halve your labor costs, or halve your capital costs and even if energy doubles you can have higher profits for the same final retail price of your widget, or you can lower your widget price.

Productivity and decreased margins are what saves us from energy cost.increases directly contributing to service and manufacturing cost increases.

Energy is very volatile. Did 140 dollar oil predict future inflation? What was the price three months later? Six months later?

Core inflation is a better measure of inflation transmission.

Mon, 06/20/2011 - 15:21 | 1385886 LawsofPhysics
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Again, you are taking a very traditional view.  Energy costs are hidden everywhere.  Not just in the power bill from the power company.  My employees also have an energy bill.  There is hidden energy costs in the food that they eat.  While energy may be volatile it is also unforgiving and has a multiplier effect.  You say I can find ways to cut a number of costs.  I say bullshit.  Spoken like someone who has never run their own business.  You have to keep good people, and good people will not stick around if their salaries are not buying what they used to, period.  Moreover, I am sure most small businesses wish that their energy costs were only 10% of their costs.  That might be the case for the conglomerates where you have horribly inefficient (and in many cases subsidized) operations, but I challenge you to talk to anybody with 50 employees or less.

While core inflation may be a better measure of inflation transmission, then you are admitting that this is not a "forward looking" tool.  In other words it is useless.  I still stand  by my original opinion that discounting food and energy when crafting an economic or monetary policy is a recipe for disaster.

Mon, 06/20/2011 - 15:05 | 1385798 Comrade de Chaos
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Unfortunately just keeping the interest rates low is only one part of the Financial Repression. The other part includes under - reporting inflation. And the concluding act involves 'encouraging' (forcing) the population, or banking system or both to hold government bonds. As the result when those three parts are combined, a government is able to get away with & roll over  high levels of debt through an invisible tax on average citizens by 'taxing' (destroying) the purchasing power of their savings .

Mon, 06/20/2011 - 15:56 | 1386094 ATM
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Most people have no savings. I would argue that what they are really doing is stealing the value of peoples work and that is the definition of slavery.

Tue, 06/21/2011 - 07:48 | 1388352 Bicycle Repairman
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Mon, 06/20/2011 - 15:54 | 1386069 Stuck on Zero
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You iterate over and over that central planning is a failure without an explanation.  Aren't all corporations centrally planned?  Would we have reached the moon without central planning?  Central planning is not inherently bad.  Bad central planning is inherently unsuccessful.  Don't confuse central planning with corruption and micromanagement.

Mon, 06/20/2011 - 17:54 | 1386568 gwar5
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I don't know who you're addressing. But I'm here so,.....  Mustn't confuse central planning with coordinated activity.

Yes, Central Planning is inherently bad. The chances they would get each decision right are nil and the ability to quickly reverse course and reallocate resources is prevented. The only reason for CP seems to be to rig the system for the CPs (it is). Moreover, everytime they get it wrong, the misallocations and unintended consequences accumulate in the economy.

Corporations -- are not central planners. Corporations are really servants to the market, trying to decipher and provide what the market tells them it wants, when it wants it, and at what price, or go out of business. The market is always the master, it is the collective diaspora of demands, and is a fickle and fleeting mistress.

Central Planners are the ones, on the other hand, who try to replace the market, by telling the market what it is going to get, when it will get it, and at what price and terms it will get it.


Now.... think of citizens as consumers of government services.... does the government really give the people what they want? Or, do they just tell them what they are going to get, when they're going to get it, and on what terms? 

Some examples of a recent CP items: school lunches, CFLs, energy, electric cars, sub-prime mortgage rates, food (via food stamps & subsidies), sugar products, salt, war in Libya, Obamacare, what medium of exchange you must use (USD), moratorium on oil drilling, encouraging illegal immigration, etc.


Central Planners impose what they want on the economy.  But the economic system is a hugely interconnected complex system and the Central Planners can no more plan and operate an economy than they can a tropical rainforest.

Yes, the Moon project was centrally planned  --- but the Apollo missions were mainly a proxy to put a smiley face on our development of multi-stage rocket ICBMs.  Welcome to central planning.

You're might be in need of some Milton Freidman. Google/youtube "Milton Friedman freemarket pencil video" and look at the short video, go from there.


Tue, 06/21/2011 - 07:54 | 1388360 Bicycle Repairman
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"Corporations -- are not central planners."

Suppose corporations request central planning and help shape the plans?


Mon, 06/20/2011 - 16:10 | 1386149 gwar5
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Mon, 06/20/2011 - 16:13 | 1386175 gwar5
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Ah yes, financial repression.

I first heard this term last month via Rickards who explained it was how the Fed would steer private investments from people like investors and savers into treasuries to help the Fed do God's work.  

Mon, 06/20/2011 - 22:20 | 1387499 PeterSchump
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I envision a fleet of airliners heading towards PIMCO HQ....

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