Someday, maybe, these central banks will find that secret formula that unlocks the commanded utopia from its monetary prison, but I think it more like what led to the end of the first Gulf War, where continued air raids upon Iraqi positions amounted to destroying rubble. As Colin Powell put it, “we were bouncing rubble with billion-dollar missiles.” That seems to be a fitting, paraphrased description of the European state of monetarism, bouncing economic rubble with trillion-euro debt missiles.
Question: what would you say to those who are concerned that when the ECB buying up bonds, electronically printing money, whatever one calls it, is the first chapter in a story that leads inevitably towards hyperinflation. What is your response to that?
Answer: I think the best way to answer to this is have we seen lots of inflation since the QE program started? Have we seen that? And now it's quite a few years that we started. You know, our experience since we have these press conferences goes back to a little more than three years. In these 3 years we've lowered interest rates, I don't know how many times, 4 or 5 times, 6 times maybe. And each times someone was saying, this is going to be terrible expansionary, there will be inflation. We did OMP. We did the LTROs. We did TLTROs. And somehow this runaway inflation hasn't come yet.
As European Central Bank Is Set to Unleash a Massive Round of Quantitative Easing, Central Bank Heads Admit QE Doesn’t WorkSubmitted by George Washington on 01/21/2015 15:23 -0400
Even Central Bankers Now Admit QE Doesn’t Work
Krugman's Japanese Legacy: Record Households On Welfare, Corporate Bankruptcies Soar, Majority Of Households Worse OffSubmitted by Tyler Durden on 01/08/2015 14:32 -0400
1. The number of households in Japan on welfare hit a record high in October, renewing the record for a 6th straight month.
2 51.1% of Japanese households said they’re worse off compared with year earlier, the most since December 2011, according to Bank of Japan quarterly survey released today in Tokyo.
3. Corporate bankruptcies linked to weak yen rose to a record 345 in 2014 from 130 a year earlier.
To question money-printing as the one-size-fits-all solution to every economic problem is to question the power structure of the status quo.
"If your mother goes to a government-subsidized supermarket and buys two pounds of sugar and three pounds of meat, how many pounds does she have?"
Just 2 short months ago we warned of the rising voice among the cognoscenti tilting their windmills towards the concept of "helicopter money," as Deutsche bank noted, "perhaps there's an increasing weariness that more QE globally whilst inevitable, is a blunt growth tool and that stopping it will be extremely difficult (let alone reversing it) without a positive growth shock." Committing what Commerzbank calls "the ultimate sin" is now reaching the mainstream as Germany's Der Spiegel notes it is becoming increasingly clear that Draghi and his fellow central bank leaders have exhausted all traditional means for combatting deflation; and many economists are demanding that the European Central Bank hand out money to consumers to stimulate the economy.
The Russian ruble fell a further 7% Monday. What is the “reason” cited in the Corporate media for this latest, further plunge in its “value” (i.e. exchange rate)? An “economic report” which shows that Russia’s economy is shrinking. Here we see the pattern of the economic terrorism perpetrated by the One Bankexposed.
With Venezuelan bonds re-collapsing as belief in a 30c recovery floor fades rapidly (and hyperinflating Venezuelan stocks soar - whether oil prices are rising or falling), the people of Maduro's socialist utopia have a new problem to contend with. After running out of toilet paper, and finding soap and shampoo hard to come by, AP reports Venezuela's more than 100 McDonald's franchises have run out of potatoes and are now serving alternatives like deep-fried arepa flatbreads or yuca, "because of the situation here; it's a total debacle."
2014 may go down as the year when gold and silver conspiracy “theories” became conspiracy “facts” as banks globally were found to have conspired to rig the prices of gold, silver, currency and many other markets.
Hugh Hendry's Eclectica Fund has had a great Q4 (up 3.3%, 4.0%, and 5.0% in the last 3 months) despite portfolio risk being quadruple his 'old normal'. How did he achieve this? He begins... "There are times when an investor has no choice but to behave as though he believes in things that don't necessarily exist. For us, that means being willing to be long risk assets in the full knowledge of two things: that those assets may have no qualitative support; and second, that this is all going to end painfully. The good news is that mankind clearly has the ability to suspend rational judgment long and often... He who hangs on to truth has lost. The economic truth of today no longer offers me much solace; I am taking the blue pills now."
Belarus In Full-Blown Hyperinflation Panic: Blocks News, Online Stores; Bans All FX Trading For 2 YearsSubmitted by Tyler Durden on 12/22/2014 16:33 -0400
Say what you want about the gold price languishing below $1200 (or not, as the case may be, after this week), and say what you want about the technical picture or the “6,000-year bubble,” as Citi’s Willem Buiter recently termed it; but know this: gold is an insurance policy — not a trading vehicle — and the time to assess gold is when people have a sudden need for insurance. When that day comes - and believe me, it’s coming - the price will be the very last thing that matters. It will be purely and simply a matter of securing possession - bubble or not - and at any price. That price will NOT be $1200. A “run” on the gold “bank” would undoubtedly lead to one of those Warren Buffett moments when a bunch of people are left standing naked on the shore. It is also a phenomenon which will begin quietly before suddenly exploding into life. If you listen very carefully, you can hear something happening...
Just because Russia has managed to stabilize its currency, that certainly does not mean the soaring dollar tantrum-cum-crude crash episode is anywhere near over, nor that stability has returned to the rest of the oil-exporting countries. Case in point, crude-exporting powerhouse Nigeria, where things are going from worse to #REF! Bid and ask prices for the naira were quoted from 162 to 190 per dollar with only 16 trades by 1 p.m. in Lagos [yesterday], compared with more than 170 by the same time yesterday, according to data compiled by Bloomberg. The naira fell 12 percent against the dollar this quarter, the worst among 24 African currencies tracked by Bloomberg after Malawi’s kwacha. Investors dropped Nigerian assets as the outlook for Africa’s biggest oil producer worsened with Brent crude prices almost halving since late June. “The banks can’t stop trading because of the circular,” the Deputy Central Bank of Nigeria Governor Sarah Alade said. “It is not supposed to close the market. We have told them we’ll continue intervening in the market, so there is no need to panic.”
The ruble is dying, and fast. Ill prepared to wait it out, the central bank is clearly a step behind the game and perhaps even out of its league. But Black Monday suggested other powers might be at play.
Monday was incidentally the day of an interesting 700 billion ruble liquidity auction. Prior to the auction, Rosneft raised 625 billion rubles (almost $11 billion) in a bond issue backed by the central bank...