Bank of England

Today’s Eurogroup meeting will be key in determining where Greece and its creditors negotiations currently stand. Over in the US today, it’s the usual post payrolls lull with just the labor market conditions data expected.

As investors and traders ponder what’s next for the financial world’s safe haven asset par excellence, and as everyone from the world’s most famous bond traders to the ECB tries to comprehend how the market could have possibly become so thin so fast, we bring you a bit more in the way of visual proof that central planners have become the world’s greatest bubble blowers as well as a bit of history that may hold clues as to what's next.

The politicians like the bankers and the central bankers, are happy to kick the can down the road and let their successors and future generations pick up the tab and pay for the economic mess that they refuse to address.

• Fed’s Yellen: Stock Valuations ‘Generally Are Quite High’ (WSJ)
• Britain's dead-heat election 'down to the wire' on polling day (Reuters)
• European Markets Roiled by U.S. Fed Chief Janet Yellen’s Comments (WSJ)
• Stocks Drop With German Bonds to Extend $2 Trillion Global Loss (BBG)
• Oil heads toward 2015 highs despite ample supply (Reuters)
• Wary of bond 'cliff,' Fed plans cautious cuts to portfolio (Reuters)
• Saudi Arabia mulling land operations on Yemen border (Reuters)

The UK General Election will be held tomorrow. The polls close at 10 pm. We should have a pretty clear picture of the overall seat count by 5 to 6 am on Friday morning. The result, as SocGen notes, is almost certain to be a hung parliament. Then the fun will really start. However, at the macro level the implications of the election may be less pronounced than many anticipate. Monetary policy has been de-politicised through the BoE’s independence, the formation of a coalition government is likely to involve convergence towards centrist positions, and a minority administration that pursues policies outside the mainstream would be unlikely to survive given its fragile parliamentary basis. In either case, the political system is unlikely to deliver radically different macroeconomic outcomes.

“[W]e have placed the exclusive custody of our entire banking reserve in the hands of a single board of directors not particularly trained for the duty - who might be called 'amateurs'... But still there is a faith in the Bank, contrary to experience, and despising evidence.”

• Win or lose, Cameron's political career hangs by a thread (Reuters)
• Greece aims for deal with lenders, IMF hard on reforms: minister (Reuters)
• Greek Jobless Legacy Adds Danger for Tsipras as Funds Dry Up (BBG)
• U.S. Will Change Stance on Secret Phone Tracking (WSJ)
• China April HSBC PMI shows biggest drop in factory activity in a year (Reuters)
• Goldman Sachs in Talks to Sell Its Coal Mines (WSJ)
• Takeover Fuel Begins to Flow as S&P 500 Bull Run Makes History (BBG)

Until the advent of the BIS, gold held by central banks came in one version. Physical. It was only after the BIS arrived on the scene did gold's macabre doppelganger, so-called paper, registered or "earmarked", gold emerge for the first time. Here is a brief history of how earmarked gold came into being...

With London, Paris, and Basel’s compliance, Nazi Germany had just looted 23.1 metric tons of gold without a shot being fired.

"The effects on underlying inflation have so far been tepid. What is worrisome is that market participants still do not see consumer price inflation returning to the ECB’s 2% target on a sustained basis, let alone going above it, over any reasonable time horizon," Goldman says. And while the bank is ultimately confident that the Goldmanite in charge of the ECB will succeed in driving up inflation over time, the market would be wise to note that the US and Japanese experience with QE don't provide much in the way of empirical support for that contention.

With US Q1 GDP set to be a huge disappointment to initial estimates of 3% growth set at the beginning of the year, and since plunging to 1% or lower when it is reported later this week because, well, it inexplicably snowed in the winter for the second year in a row, earlier today we learned that US harsh weather cross the Atlantic and landed in the UK where ONS reported that the economy grew at a tepid pace of just 0.3% in the first quarter, well below consensus estimates of 0.5%, and at the lowest pace since Q4 2012 when GDP posted a 0.3% drop.

The worldwide commodity glut is not a surprise to Austrian school economists - It is a wonderful example of the adverse consequences of monetary repression to drive the interest rate below the natural rate.

Germany had lost the war, the Nazi industrialists agreed, but the struggle would continue along new lines. The Fourth Reich would be a financial, rather than a military imperium. The industrialists were to plan for a “postwar commercial campaign.” They should make “contacts and alliances” with foreign firms but ensure this was done without “attracting any suspicion.”... The State Department’s efforts on Schacht’s behalf worked. He was initially found guilty but was then acquitted, to the fury of the Soviet judge.

"The global economy is awash as never before in commodities like oil, cotton and iron ore, but also with capital and labor—a glut that presents several challenges as policy makers struggle to stoke demand," WSJ notes, suggesting yet again that QE can cause deflation when those who have access to easy money overproduce but do not witness a comparable increase in demand from those to whom the direct benefits of ultra accommodative policies do not immediately accrue.