• Sprott Money
    03/01/2015 - 23:51
    Clearly if Western governments were ‘merely’ drowning in debt-to-GDP ratios of roughly 100%, then theycould still argue that attempting to manage these debt-loads was legitimate rather than...

Monetary Policy

Tyler Durden's picture

Breaking Bad (Debt) - Episode 3





The 2008 worldwide financial crisis was produced due to excessively easy monetary policy, which caused the largest debt driven mal-investment in housing, automobiles, and Chinese produced crap in world history. The consequences of this debt bacchanalia should have been the orderly liquidation of the Wall Street entities that created the crisis, the writing off of trillions in bad debt, corporate and personal bankruptcies of businesses and people who borrowed recklessly, a sharp steep economic decline to cleanse the excesses, and politicians who immediately began the process of reducing budgets and addressing long term unfunded unpayable liability promises. Instead, the psychotic oligarchs did not want to lose any of their power, wealth or control over the proletariat. They have done the exact opposite of what needed to be done.

 
Tyler Durden's picture

A Peek Inside The Chaos Of A Jobless Claims Website





Presenting the Florida jobless claims website. According to the Miami Herald reports, on Friday, the state’s auditor general issued a scathing 45-page audit that joins mounting evidence that CONNECT - aka Florida's Online Reemployment Assistance System or said simpler, jobless claims website - is a system in disarray.

 

 
Tyler Durden's picture

A Who's Who Of Awful Times To Invest





When investor preferences are risk-seeking, overly loose monetary policy can have a disastrous effect by promoting reckless speculation and enhancing the ability of low-quality borrowers to issue debt to yield-starved investors. This encourages malinvestment and financial distortions that then collapse, as we saw following the tech and housing bubbles. Those seeds have now been sown for the third time in 15 years. In fact, the present moment likely represents the best opportunity to reduce exposure to stock market risk that investors are likely to encounter in the coming 8 years.

 
Tyler Durden's picture

Meet The Philly Fed's New President (No, He Didn't Work At Goldman)





With Philly Fed's 10th president, Charles Plosser retiring effective March 1, 2015, algos were wondering if he would be replaced with another former Goldman partner, or if his seat would be filled with yet another academic. The answer, as the Pgilly Fed reported moments ago, is the latter. Meet the new president of the Philly Fed: Patrick T. Harker, 56, currently president of the University of Delaware, former dean of the Wharton School at UPenn, and a member of the Philadelphia Fed's board of directors. His career academic background: Harker has a Ph.D. in civil and urban engineering, a master's degree in economics, and an M.S.E. and B.S.E. in civil engineering from the University of Pennsylvania. Wait, so no econ PhD? There may be some hope yet...

 
GoldCore's picture

Gold Demand in Greece, Italy, Spain, Russia, Germany, UK and U.S.





Reuters Interview GoldCore. How has demand compared in different regions of Europe so far this year? p.s. Dislike term silver bug and gold bug. Pejorative and we don't call people stock roaches or paper bugs or dollar bugs   : )

 
Tyler Durden's picture

Taking The Monetary Policy Ride Into The Theater Of The Absurd





Somehow, monetary policy is still believed neutral in the long run and that bubbles are market events. Central banks have shown why they cannot command economic performance, but that doesn’t mean they can’t give one hell of a comedic performance. We have taken a monetary ride now into the theater of the absurd.

 
Tyler Durden's picture

Fed Independence Is A Joke, So Why Not Audit?





Nothing says limited government and separation of powers like a bureaucracy unaccountable to the voice of the people! Then again, Yellen doesn’t care much for democratic oversight. She’s a caricature of Randian libertarianism: someone who wants to do whatever, whenever, without rulers. The problem is Yellen isn’t operating a private railroad company. She’s the figurehead for a government institution created by Congress. If democracy means anything, it’s that voters have some measure of control over political bureaucracies.

 
Tyler Durden's picture

China Cuts Interest Rates, Takes Number Of Central Banks Easing In 2015 To 21





And then there were 21. Hours ago on Saturday, the country whose currency is largely pegged to the dollar which itself is now anticipating a rate hike in the coming months, surprised the world by confirming its economic slowdown yet again following a recent rate cut just this past November when it lowered its benchmark rate by 40 bps, after it again cut benchmark lending and deposit rates by 25 bps starting on March 1. Specifically, the PBOC will lower the one-year lending rate to 5.35% from 5.6% and its one-year deposit rate to 2.5% from 2.75%. It also said it would raise the maximum interest rate on bank deposits to 130% of the benchmark rate from 120%.

 
Tyler Durden's picture

"Monetary Policy Is Bankrupt" Dr. Lacy Hunt Warns "Bonds, Not Stocks, Are A Good Economic Indicator"





"While the wealth effect is a theoretical possibility, it is not supported by economic fact. The stock market is not a good guide to the economy, but...the bond market is a very good economic indicator. When bond yields are very low and declining it’s an indication that the same is happening to inflation and that economic activity is weak. The bond yields are not here for any fluke of reason. They are here because business conditions in the US and abroad are quite poor."

 
Tyler Durden's picture

Greenspan: "The Stock Market Is Great", But The Economy Feels Like In "The Late Stages Of The Great Depression"





While conflicting economic data leaves hope for both buills and bears, Alan Greenspan warns that, unlike Yellen, "US economic growth is not strong." The maestro then breaks the golden rule of central bankers and explains how The Fed was, in fact, the main driver of the P/E multiple expansion in stocks; and when asked if this ends as badly as last time? He concludes "It depends...When real interest rates start to move up, that's when the crisis could hit," concluding with a warning that global "effective demand is extraordinarily weak - tantamount to the late stages of the great depression."

 
Tyler Durden's picture

3 Things - High Yield Warning, Yellen's Employment & Economy





While the economy is showing some signs of impact from falling oil prices, a port strike in California, weak global demand for exports and an exceptionally cold winter; the markets are pushing all-time highs. There is much hype being placed on the ECB's plans for launching QE in March, however, much remains to be seen as to just how effective it will be in a negative interest rate/deflationary enviroment. But then again...there is always "hope."

 
Tyler Durden's picture

Europe's "Them" & "Us" Fiscal Faux Pas





Oh well, some are more equal than others. One day after Eurogroup head Dijsselbloem says France won’t get any more lenience... "France must respect EU budge rules," ... the EU over-rules him "France gets more time to meet EU budget rules."

 
Tyler Durden's picture

Janet Yellen Is Freaking Out About "Audit The Fed" – Here Are 100 Reasons Why She Should Be





Janet Yellen is very alarmed that some members of Congress want to conduct a comprehensive audit of the Federal Reserve for the first time since it was created. During testimony this week, she made “central bank independence” sound like it was the holy grail. Even though every other government function is debated politically in this country, Janet Yellen insists that what the Federal Reserve does is “too important” to be influenced by the American people. Does any other government agency ever dare to make that claim? If the Fed is doing everything correctly, why should Yellen be alarmed? What does she have to hide?

 
Tyler Durden's picture

Regret? Why Take A Chance





Behavioral economics suggests that a little QE can change human behavior at the margins, but no amount of QE is enough to change human nature at its core. The High Priests of the IMF, the Fed, and the ECB are blind to this because all of modern economic theory – ALL of it – is based on a single bedrock assumption: humans are economic maximizers. Yes, we are maximizers of reward. But we are also minimizers of regret. We seem destined to learn the hard way... once again...  that you can’t change human nature by government fiat. But individual investors and allocators can listen and learn from these old good ideas, and that’s how you survive the Golden Age of the Central Banker.

 
EconMatters's picture

Janet Yellen Encourages More Levered Risk Taking in Markets Tuesday





The last thing Janet Yellen needs to be doing right now is cheer-leading more risk taking on behalf of financial market participants!

 
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