Fractional Reserve Banking

Central Bankers Are Losing Faith In Their Own Alchemy

"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."

Dave Collum's 2016 Year In Review - "And Then Things Got Really Weird..."

"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..."

"Europe Will Devalue Or Dissolve..."

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.

Don’t Sweat The Election. The Next Crisis Is Already Baked Into The Cake

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.

Six Things To Consider About Inflation

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.

This Is How Much Liquidity Deutsche Bank Has At This Moment, And What Happens Next

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.

An Unorthodox Solution To The World's Economic Problems

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.

Why Is There So Much Confusion In Macroeconomics?

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?

Negative Rates & The War On Cash, Part 2: "Closing The Escape Routes"

History teaches us that central authorities dislike escape routes, at least for the majority, and are therefore prone to closing them, so that control of a limited money supply can remain in the hands of the very few. The existence of escape routes for capital preservation undermines the viability of the banking system, which is already over-extended, over-leveraged and extremely fragile. In the 1930s, gold was the escape route, so gold was confiscated. This time cash serves that role...

Michael Lewitt: "We're In The Late Stages of Ponzi Finance"

“They’ve tried to solve the debt crisis by printing trillions of dollars of more debt, and somehow they expect the economy to grow under the weight of those burdens. We’re just borrowing new money to pay back old money. I would say that we’re in the late stages of Ponzi finance.”

Germans "Lose Faith In Banks", Rush To Buy Safes

First Japan, now German savers are leaving the "security" of savings banks for the true safety of paper cash parked inside home safes, where the central bank's negative rates can never reach. As a result safes across Germany are selling out as German savers finally "lose faith in banks."