Money Supply

The Path To The Final Crisis

We cannot be sure what shape the next crisis will take, although it seems likely that it will be yet another “deflation scare”, mainly caused by falling asset prices. However, we do know what the last crisis of the current system will look like. It will entail a crumbling of the public’s faith in fiat money and the institutions that issue and administer it.

Verge Of Revolution: The Story You Aren't Being Told About The Brazilian Uprising

While Brazilians are angry and tired of their economic hardships, they are also incensed at the country’s history of corruption, which now includes a massive presidential scandal carried out by politicians and lobbyists during the current and previous administrations. This misconduct has given residents of all walks of life enough incentive to take their demands to the streets. Mainstream media has covered the major protests overtaking the streets of Brazil at the outset of an apparent political revolution, but few discuss the problems that have been brewing for decades in South America’s largest nation.

Saudis To "Modernize" Economy As Interbank Rates Surge & Money Supply Collapses At Record Pace

For the first time since January 2009, 12-month Saudi interbank rates have breached 2.00% - double the 1% lows of August. This 'stress' is also evident in the record pace of collapse of Saudi money-supply and while Riyal forwards have rallied back from extreme bets on devaluation, they remain concerning for Saudi officials who to undertake some deep and fundamental changes to their economy, reforms that no amount of browbeating from organizations like the IMF could induce.

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The Forex Rigging Irony

While Forex banks, traders, and other institutions are being blamed for market rigging, the Swiss National Bank can publish reports about its own market rigging, but instead of being a scandal, it's economic data.  That's because the vast majority don't understand how the Forex markets work.  It's not insulting - it's a fact.  Currently there are hundreds of pending litigation cases against a plethora of Forex banks, traders, and other institutions - but none against a central bank.

Month-End Market Weakness Looms As Monetary Base Trumps Buybacks

Regardless of which source ultimately proves more important, the below suggests that market liquidity tends to become more scarce around the end of the quarter at present. We have already seen this effect play out twice in row and it could well be that there will be another replay this quarter.

Steve H. Hanke's picture

Authored by Steve H. Hanke of The Johns Hopkins University. Follow him on Twitter @Steve_Hanke.

Since 1983, when Hong Kong adopted its currency board system, speculative bets against the Hong Kong dollar (HKD) have ended in the graveyard. Just ask Bill Ackerman. He bet the house in a 2011 attach on the HKD, and he lost big. Now, it’s reported that the likes of George Soros and Kyle Bass are rolling the dice against the HKD. They will lose, too.

A Whiff Of Panic & The Pretense Of Europe's Monetary Cranks

There once was a time when economists would have been in an uproar upon witnessing the shenanigans of today’s central bankers. Nowadays they are not only acquiescing to them, they are actively demanding more and more intervention. Instead of being the voice of reason warning of the dangers such policies harbor, they have become cheerleaders for them. It is only a very small consolation that they will eventually be discredited. The cost will be extremely high.

Deutsche Bank: Negative Rates Confirm The Failure Of Globalization

"The demise of positive interest rates may be nothing more than the global economy reacting to a chronic oversupply of goods through the impact of globalization including the opening up of formerly closed economies as well as ongoing technological progress." - Deutsche Bank

Norway’s Interest Rate Conundrum

We are experiencing 1970’s style stagflation, coming from the supply side, not demand. Prices are going up because Norges Bank continues to destroy the Norwegian Krone, turning it into the Nordic Peso. This is where they are “hiding” the damage to save rest of the economy. For example, housing prices will rise in NOK but fall in USD or gold (universal commodity) terms. It’s a shell game, leading to long term decline or even worse, an unexpected period of elevated inflation, requiring a rapid rise in interest rates. 

Why Negative Rates Can't Stop the Coming Depression

The logic of lowering rates below zero is so boneheaded that only a PhD could believe it. It’s all relative, you see. It’s like standing on a train platform. The train next to you backs up…and you feel you’re moving ahead. Negative interest rates are like backing up. They give borrowers the illusion of forward motion... even if the economy is standing still.

Hillary's Scary New Cash Tax

As the crisis develops, our deeply indebted government will act like a giant wounded beast, lashing out in all directions. It will grow more desperate for control. It will grow desperate for money. And just like FDR did in the 1930s, it will confiscate the wealth of private citizens. But Hillary Clinton (or Donald Trump, or whoever wins the election) won’t go after your gold. Nowadays, the gold market is very small compared to the overall economy. Going after gold would be too much work for the government. The government is going to go after YOUR CASH.

China Trade Balance Plunges To 11-Month Lows As Exports Crash Over 25%

Worse than expected is an understatement. Things are not getting better in China as Exports crashed 25.4% YoY (the 3rd largest drop in history), almost double the 14.5% expectation and Imports tumbled 13.8%, the 16th month of YoY decline - the longest ever. Altogether this sent the trade surplus down to $32.6bn (missing expectations of $51bn) to 11-month lows. Stocks are mounting a modest rebound on this terrible data (moar stimulus hopes) but after $1 trillion of new credit in 2 months, is there seriously anyone left who thinks moar will help?

Which States Rely Most On Federal Spending?

The state most reliant on federal spending is Mississippi where federal spending is equal to 32% of the state's GDP, and the current central banking regime perpetuates the current imbalance between net tax payer states and net tax receiver states by making it more difficult for poorer parts of the country to accumulate wealth and increase productivity.