Marine Le Pen's threat to redenominate €1.7 billion in French debt infor francs has sparked panic among the establishment, with rating agencies, economist and central bankers all warning that this would amount to the largest sovereign default on record, threatening chaos to the world financial system on top of the collapse of the single currency.
"The War on Cash is a mortal threat to individual and economic liberty. I think its advocates are clearly sociopaths and enemies of the common man. Unfortunately, I don’t see the war slowing down. I see it heating up."
“The root problem with conventional currency is all the trust that’s required to make it work. The central bank must be trusted not to debase the currency, but the history of fiat currencies is full of breaches of that trust ...”
"The idea that paper money could replace intrinsically valuable gold and precious metals... was both revolutionary and immensely seductive. It was in fact financial alchemy - the creation of extraordinary financial powers that defy reality and common sense. Pursuit of this monetary elixir has brought a series of economic disasters - from hyperinflation to banking collapses."
"Markets don’t have a purpose any more - they just reflect whatever central planners want them to. Why wouldn’t it lead to the biggest collapse? My strategy doesn’t require that I’m right about the likelihood of that scenario. Logic dictates to me that it’s inevitable..."
It’s hard to overstate the threat posed by these two votes to the EU - the world’s largest economic entity - and by implication to the rest of the global financial system. Italy is the third biggest country in the EU, and France is the second. Let either pull out and the result might be dissolution and the end of the euro. So what does a fiat currency/fractional reserve banking Establishment do when confronted with such a looming catastrophe? What it always does of course: Cut interest rates and ramp up money creation in order to devalue the currency.
Bullion Banking is fractional reserve gold banking. The proliferation of unallocated gold credits has created a system in which very little physical gold backs up huge amount of claims on that same gold.
From here on out politics are only relevant at the extremes - major war, corruption scandal, martial law etc.Short of that, the fiat currency/fractional reserve banking world has such institutional momentum that it really won’t matter whether Trump is picking on bankers and building his wall or Clinton is protecting Wall Street and raising taxes. Debt will keep soaring as it has under every president since Reagan and jobs will disappear as machines replace people, thus bringing the end of the current system inexorably closer.
The near-zero interest rates favor short-term production schedules with minimal capital requirements, resulting in low-risk production lines of cheap goods. That’s why we have “pound- shops” and 99p shops and all the other shabby outlets that now litter every suburban high street - creating the illusion of zero inflation.
"In our opinion it is not so much funding issues but rather derivatives exposures that more likely to trouble markets going forward if Deutsche Bank concerns continue. This is especially true if these concerns propagate into a confidence crisis inducing more rapid unwinding of derivative contracts."
Following today's Deutsche Bank fireworks, Goldman reports that "crisis” questions are being asked: “is there risk of a financial crisis re-run” and “can a large European bank face a liquidity event”? To answer these questions we look at the total liquidity accessible to Deutsche Bank, and what are the options facing the bank next.
We currently face a monumental dilemma. How do we extract ourselves from all this excessive debt without crashing the world economy? It’s basically a “one time” get out of jail card for the world economy.
Should we print, not print? Stimulate, not stimulate? Is austerity the right or wrong policy? Is government spending or printing effective? If we ask two economists these questions, we will likely get three opinions for each question. Economists seem confused, yet these questions are more important today than ever. Where does this confusion come from?