Economic principles explain why the Saudis began, in late 2014, to pump crude as fast as they could – or close to as fast as possible. In fact, there is a good reason why the Saudi princes are panicked and pumping.
On Wednesday evening, it all fell apart in Brazil when the judge spearheading government corruption probes released wiretaps which seem to prove that Dilma Rousseff indeed appointed former President Lula to chief of staff in order to shield him from prosecution. When the tapes were released, Congress broke into a shouting match and Brazilians poured into the streets in 17 of 26 states calling for an overthrow of the government.
At this point, one wonders why any central banker would chase down the NIRP rabbit hole only to find themselves the protagonist in the latest retelling of "Krugman in Wonderland," but alas, the experiment continues. The only question now is this: will the FOMC take the plunge? Here's a chronological list of Fed NIRP commentary.
"Federal Reserve officials reduced estimates of how much they expect to raise short-term interest rates in 2016 and beyond, nodding to lingering risks to the economic outlook posed by soft global economic growth and financial-market volatility."
In the latest embarrassment for US-armed and trained Syrian rebels, Division 13 was overrun in Maarat Numan on Sunday when al-Nusra (who has a history of making a mockery of the US effort in the country) seized TOWs, ammo, and armored vehicles. 40 FSA fighters were kidnapped. Meanwhile, The Pentagon wants to restart the ill-fated trained and quip program.
It’s getting weird and the market is having a tough time figuring out what to take seriously, what to ignore, what to laugh nervously about and what to just laugh at. Are serious economists actually have a debate about whether it is a good idea to just print up cash and pass it out? Is that really monetary policy? Are governments really talking about banning actual currency, the very money created by that government? Money that depends, oh by the way, solely on people’s trust that the government will stand behind the money they are about to outlaw? Has everyone lost their freaking minds?
The sign of a totalitarian or authoritarian state is a media that feels no responsibility to investigate and to find the truth, accepting the role of propagandist instead. The entire Western media has been in the propaganda mode for a long time. In the US the transformation of journalists into propagandists was completed with the concentration of a diverse and independent media in six mega-corporations that are no longer run by journalists. The government has us where it wants us—powerless and disinformed.
The size and scope of the political, economic and financial problems that now challenge the relative stability and tranquility of developed societies are unprecedented. Negative interest rates combined with the eradication of cash appear as a desperate attempt to control global private wealth. Should the war on cash prove unsuccessful in its early stages, banks could be closed for long periods.
Italy is big enough to matter (it is the eight largest economy on the planet), but so uneventful that most does not pay any attention to what is going on there. We contend that Italy will, during the next year or two, be on everyone’s radar screen as it has the potential to derail the European project for real.
The same Fed which for 7 years provide generous funding to offshore commercial banks, is now granting foreign central banks the same arbitrage privilege, one which worst of all, is almost entirely shrouded in secrecy.
There are times you try to connect the dots. There are others where those connections warrant adorning your trusted tin-foiled cap of choice; for you just can’t get there unless you do. This I believe is one of those times. And if correct? What at first might appear apocryphal, may in fact, be down right apocalyptic.And besides, what good is a tin-foil capped conspiracy theory anyhow if it doesn’t have the potential for doom, correct? The implications for everything we now take for granted such as: money, enterprise, global commerce, and a whole lot more may be far closer to a “Minsky moment” than any of us dared to imagine.