The Federal Reserve has pursued the unprecedented monetary policy of lowering rates to zero and increasing their portfolio from 500 billion to over 4 trillion. But as the Fed reminds us, there is a cost.
"China... across the board... is preparing for something big in currency markets... The world has an unease about the dollar system... former President Hu of China said 'the dollar is a product of the past'."
The reason everything is being built for the wealthy, is because all the gains from the oligarch recovery have gone to the wealthy. This is no accident. It’s how the bailouts were designed, and how the status quo operates. Our socio-economic system since 2008 can be best described as serfdom, and nothing is going to change until people admit this, rather than hanging on to false hopes that they one day too will become an oligarch. It’s not gonna happen.
That the Fed and other central banks have unleashed the speculative furies is an unassailable and baleful reality. What is going on here plain and simple is a one-sided game of chicken. The robo-traders and hedge fund buccaneers on Wall Street press the market higher on virtually no volume or conviction whenever macro-economic weakness presents itself, virtually daring the Fed to maintain is ultra-accommodative stance still longer. The casino gamblers will keep chop, chop choppin’ higher until they finally lose confidence that the Eccles building is heaven’s door to further riches. Then the machines will sell, sell, sell. There will be no credible Fed speakers to stop them.
"Democratic presidential candidate Bernie Sanders wants to take from the rich in order to make public college tuition-free for everyone else. On Tuesday, the Vermont senator will hold a press conference in the nation's capital at which he will introduce a plan to use a so-called Robin Hood tax on stock transactions to fund tuition at four-year public colleges and universities," Bloomberg reports.
Monetary policy has now become like a pressure cooker with a defective safety-valve. Central bankers realise it and investors are slowly beginning to as well. Add into this mix a faltering global economy, a fact that is becoming impossible to ignore, and a dash-for-cash becomes a serious potential risk to both monetary policy and the banking system. There is an obvious alternative to cash, and that is to buy physical gold.
What is extremely clear is that there is something amiss with the statistical headline employment and economic data. While there are indeed pockets of improvement, which should be expected following a recessionary contraction, there is a lack of widespread recovery. That sentiment is clearly reflected in every major poll of American's over the last year. What is important is that there is a clear disconnect between the financial markets, statistical economic headlines, and the reality of the vast majority of American consumers.So, riddle me this - what happens when that disconnect is eventually resolved?
For many reasons the answer to the question: “will the commodity price rally continue?” is particularly important at this juncture, and the answer from Barclays is 'no' - it will prove very tough to make further significant gains in commodity prices from here unless supply/demand conditions improve very fast indeed. There are a multitude of factors but what erks them the most is the huge disconnect between price action in physical markets where differentials are signalling oversupply and futures markets where all looks rosy. The risks for a reversal in recent commodity price trends are growing, and with fewer market makers to absorb the shocks, potentially, a period of high volatility could lie ahead.
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.
"Bitcoin represents a monumental paradigm shift that will transform the social, political and economic landscape," according to Paul Vigna and Michael J. Casey in this presentation. Since its advent, Bitcoin has gained a reputation for instability and illicit business; naysayers fear its power to eliminate jobs and upend the concept of a nation-state. Vigna and Casey show that cryptocurrencies can also bring good. For one, they remove the middleman from the financial system, giving the power to the people and safeguarding from the devastation of a 2008-type crash. They also promote financial equality; Bitcoin has already given the world’s unbanked - those marginalized billions who’ve never had a bank account - unprecedented access to the global economy.
Threatened with deflation, the authorities will want to turn the tide in the worst possible way. What’s the worst way to stop deflation? With hyperinflation. Yes, we may suffer a year or two more of sluggish growth... or even deflation. Stocks will crash and people will be desperate for paper dollars. But sooner or later, the feds will find their feet and lose their heads. Most likely, the credit-drenched world of 2015 will end... not in a whimper of deflation, but in a bang. Hyperinflation will bring the long depression to a dramatic close long before a quarter of a century has passed.
While we are sure President Obama will find a way to comment on today's jobs number (focusing on the unemployment rate we suspect and not the quality of jobs or record number of people out of work), his main topic of discussion is how wonderful the ultra-secret "Trans-Pacific Partnership" deal is for Americans... and why congress must pass it asap.