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Germany Under Pressure To Create Money
It would seem this discussion is extremely prescient as ECB's Mersch is once again raising the spectre of Draghi and his cohorts looking at ways to reduce fragmentation (and implicitly in their view, improve SME lending) by securitizing SME loans and taking the ABS directly on to the ECB's balance sheet. This theoretical injection of credit into the system gets close to the fine line Germany won't cross of outright monetization (if you really squint). Perhaps, the ECB should consider 'demand' as opposed to supply and just who benefits...
Via John Browne via Euro Pacific Capital,
Currently, central banks around the world are walking in lock step down a dangerous path of money creation. Led by the Federal Reserve and the Bank of Japan, economic policy is driven by the idea that printed money can be the true basis of growth. The result is an unprecedented global orgy of currency creation. The only holdout to this open ended commitment has been the hard money bias of the German-dominated European Central Bank (ECB). However, growing political pressure from around the world, and growing dissatisfaction among domestic voters have shaken, and perhaps cracked, the German resolve. While German capitulations in the past have been welcome occurrences, in this instance the world would be better served if the Germans could stick to their guns.
Last week the statement issued by the Federal Open Market Committee (FOMC) put to rest any expectations that Quantitative Easing in the United States would be coming to an end anytime soon. With an ambiguous, but decidedly dovish statement, the stage appears to be set for an expansion of the $85 billion per month program. The statement further obscured the criteria that the Fed is supposed to rely on to begin a winding down of the program, leaving market participants increasingly uncertain.
Trying to outdo the Fed itself, the new leaders of the Bank of Japan have thrown all monetary prudence to the wind. Also, in just a few months Canadian Mark Carney, a dyed-in-the-wool Keynesian, is set to take the helm at the Bank of England. Taken together, these intentions would suggest that the world is set to take monetary expansion to a new level. The odd man out has been the ECB, which had long been dominated by the Germans. Over the past few years, the ECB has elicited the ire of Keynesian economists by offering to deliver fresh liquidity only in exchange for promises of fiscal restraint by the troubled Eurozone members. However, the massive pressure currently being placed on Germany appears to be overwhelming its resistance.
Within the seventeen member nations of the Eurozone, there are now some nineteen million unemployed, or 12.1 percent. In Greece, the unemployment rate is 27.2 percent; in Spain 26.7 percent; and in Portugal 17.5 percent. On the other hand, unemployment in Luxembourg is 5.7 percent; in Germany 5.4 percent and in Austria, 4.7 percent. This disparity is clear and increasingly affects politics. These tensions have resulted in a string of electoral victories by left wing parties in the southern tier. However, despite their resentment of the ECB, IMF and Germany, all have expressed a strong wish to remain within the Eurozone. (They seem to know which side of their brioche is buttered).
But the peoples of the northern core countries have begun to chaff at the yoke. The average German sees continued bailouts as a means to reward and support what they believe to be a slothful, and politically corrupt, southern fringe. As the crisis drags on, their previously 'liberal' impulses of support are giving way to deep resentment. Political parties calling for strict controls of bailout funding and immigration are growing in Germany, the Netherlands and even France.
However, the German elite has long seen the EU as an opportunity for acquiring the empire Germany has for so long desired. Historically, empires are paid for in treasure and blood. The carnage of two world wars may have dimmed their enthusiasm for blood, but it appears that the German elite are prepared to pay for a Eurozone empire with treasure alone. But with their own population unwilling to pay more for direct bailouts, and the indebted countries unwilling to tighten their belts, increased monetary flexibility may be the only means open to the Germans to maintain union.
Last week, EU growth projections were reduced by a further 0.1 percent to a negative 0.4 percent. Facing this grim reality and shrinking resistance from the dominant Germans, the EU bureaucracy appear to be becoming more lenient. Mr. Olli Rehn, the EU's economic chief, had been expected to grant waivers of one or even two years for Spain, France and even the Netherlands to reduce their debt to less than three percent of GDP. And right on cue, the French finance minister declared just this past weekend that the "era of austerity" had come to an end by announcing that France would no longer abide by prior Eurozone debt limits in exchange for ECB bailout funds.
As a result, it appears likely that the ECB will begin falling into step behind the Fed and the banks of England and Japan to dispense substantial QE. With all of these central bank oars pulling in the same direction, I would expect an asset boom with financials, commodities and real estate rising strongly once again. Should that boom continue, expect the financial elite to celebrate unabashedly. This week, Bill Gross, the head of the massive Pimco investment firm nicely summed up the sentiment, "Pimco's advice is to continue to participate in an obviously central-bank-generated bubble.''
I would remind all who would follow such advice to recall that the last two central bank-financed booms (Dot com and Real Estate) were brought to an end by spectacular collapses. The chances are that the next asset class to experience a similar trajectory could be fiat money itself. The fall of currency will be much more significant than falls in stocks or real estate.
Although we may all be very glad that the Germans of 70 years ago could not hold the line in Normandy, we may regret that their grandchildren could not resist similar international pressure on their monetary empire in Frankfurt.
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Okay fine, print the DM and be done with the Euro, stop trying to please everyone. Sounds good to me, but then we all know Germany is simply a proxy vote for the bankers, otherwise they would have simply told The Fed that they have one week to return all the fucking gold.
Let it all come down. It's broke.
"Let it all come down. It's insolvent." - fixed.
Printing money?
I thought all they were creating was debt based fiat.
Edit: Now that I thought about it, 3-D printing gold coins from a kilo bar is quite possible, but don't think this is the intent.
That's it, all we're doing now is waiting for whatever day it all explodes. There's no 'gradual unwinding' coming in fact they'll just have to ramp exponentially, DOW 15,000 has cost every american $130,000....let's get busy paying that up!
What....everyone forgot the bar tab and still just staggering around drunk? Typical of drunks, never think about tomorrow's skull splitter.
THREAD JACK; hey germany.got gold yet?
They printed new DM about two years ago if I remember correctly. The note paper company in Canada got a huge order and it was rumored to be the Germans printing currency to dump the Euro.
I cash the rent checks I get every month and hide the currency. I have to take my passport into the bank because they don't want to give me cash......then when I stand at the teller window and she realizes I am not going away she cashes the check and gives me currency. They always ask me "do you have an account with us?". I say no I am going to travel and need the cash.
The banks hate to give up any currency these days.
Look at what QE has accomplished for the Japanese:
The Nikkei has gained more than 30 per cent since the start of the year.
Look what QE has done for USA:
Dow above 15,000 and up 15% for the year.
Print, Germany, print. It's free money. Bernanke will keep a lid on gold and silver for you.
yeah, wow, the US runs a 7% deficit to create 3% "growth".
anyone spot something unsustainable in this equation?
We can make it up on volume. What does the barber say????... Next!
3% US "growth" is a chimera manufactured by reporting real 4% inflation as 1%.
oh, i completely agree, and the real deficit is larger than 7%, but by quoting establishment numbers, clueless idiots who trust government statistics can only argue about rhetoric not facts
When did they post 3% growth numbers? It's been in the 2s and below for a long damned time now.
With real inflation running probably closer to 5% I doubt on net we posted ANY growth for years now. We just slowed the trajectory of the downturn that started in 2007 (you could make this argument starting at a point even further back, but since 2007 is an easily remembered timeframe).
Most recent was 2.5%. I deliberately overstated the number.
But yes;
- inflation stats are bull
- GDP growth stats are bull
- deficit stats are bull
- debt ratio stats are bull
But in reality, they're all interconnected. Manipulate one, and the rest will follow suit.
All excess available Euro area capital rations are being pushed into the German black hole.....
What matters is euro area production (especially primary production) as a total - which is declining
Ever since 1980 or perhaps earlier euro countries outside the core have lost their primary & basic secondary industries so as to further increase the cores entrepot activities.
First we became a Imperial market and now we have become a sort of negative resource hinterland for their sick operations.
The Cyprus thingy was all about pushing real physical resources onwards and upwards.....
The core objective is to stop all activity in Ireland & elsewhere.
To give a example
The euro soviet is seeking to stop turf cutting in Ireland on spurious environmental grounds.
They are also seeking to stop smoky coal burning in rural areas !!
The objective is to transfer diesel used for extraction and transport of primary products towards the cores added value products such as private cars and shit
The periphery is living within a Amsterdam entrepot nightmare.
No more diesel for that Toyota Hilux which actually does some work in Ireland means more diesel for useless BMWs
http://www.youtube.com/watch?v=aMV4-7DVEj0&list=UUGun52YFO7IFFdV51fMA3HA&index=20
The core objective of these bastards remains the same.
Destroy all national redundancy & cohesion - when this is done you can then bomb the shit out of them.
Allow me to clarify this for you; humanity isn't just another ponzi, it's the ponzi.
http://m.youtube.com/#/watch?v=9IKVj4l5GU4&desktop_uri=%2Fwatch%3Fv%3D9I...
It's people. Soylent green is made out of people.
Do not be that sour LawofPhysics. What happened this morning, the Sun failed to rise for you?
Not at all, I bought teasuries ahead of the Fed yesterday. Just stating a fact that there are 7+ billion (and growing) people in this finite system all competing for a better quality of life. This means that the demand for real commodities to make that happen is also growing. Trade accordingly. With respect to treasuries, America goes tits up if borrowing costs get too high (my bench mark is close to or above 2.0% on the ten-year) trade accordingly. In case you missed it, this is a trading site. who's sour, sun, rain, and many other natural elements are good for my business, bring it!
HI LOP, Treasuries are going to be down YoY in just 2 months.
I agree with you, REAL RATES CAN NOT RISE, BUT NOMINAL RATES CAN RISE APLENTY AS LONG AS REAL RATES STAY NEGATIVE.
ACtually if inflation moves up by 2% to say 4.5% and intrest rates move up by 1% on the long end to 2.8%. It is better for the US finances.
Tax revenues are collected in % while debt is in nominal terms. So rising prices of 5% with tax revenues rising 3.5% in nominal terms while cost of debt in nominal terms rises 1.5%. NO PROBLEMO.
If you look at ARgentina, their internal debt decreased massively, interest rates rose massively, but real rates plunged massively.
The real rates plunge in Argentina is why the internal debt to GDP plunged. GDP in nominal peso exploded, tax revenues increased massively in nominal terms in Argentina since 2002 (collected as a %- yet in real terms they could collapse it does not matter), while the debt in peso is nominally fixed.
This is inflate away. Real rates is what matter, nominal rates do not matter a single bit, except to shape inflation expectations and a curve too steep would make base money jump to fast in circualtion.
At that point we will have go-stop-go 70s style that Soros explained in his latest Davos interview. At that point the FEd will have to raise rates agressively.
If the steamroller is slow and you are walking by, why not pick up the silver dimes/nickels.
Do not get me wrong, I own teh phyzz Silver, outside of the steamroller.
As for the steamroller I always walk behind it when it is on a downward slope never in front of it, you never know the brakes could fail.
So that is why I am short treasuries and I own a foreign subsidiary of Philip Morris paying 8.9% dividend, that covers my carry on short treasuries. If the brakes fail I make money, if the brakes are fine, I am not losing. If the long term interest rates rise but still lag inflation, I am making and there is no abrupt catastrophe for the US but a long shit sandwhich of above "normal" inflation given tepid nominal growth
As for commodities, the situation will get tense, I know. We have to get working on that. Population control and smarter use of resources, push on renewables is the only solution. Everytime I see the solar crowd repeating that by 2015 they will be at grid parity and every quarter they announce a new world record of efficiency and a plunge of solar panel cost per watt, I feel a bit better, but I hear you, we have a resources problem.
Why print and kill the euro when you can choke and kill the people????
Well Germany is attempting the impossible, that is keep the bad debt and not printing at the same time. There is a solution which involves massive bankruptcies everywhere. Hugely painful but it is a super fast deleveraging process and bankrupting the people who are not prudent is not necessarily a bad thing.The credit to base money ratio plunges fast.
In the XIX century the 5 pounds note were banned so that people would carry only base money (Gold coins) so that their savings would not be in currency (equivalent of bank account) and could not fail. The massive failures would be born by hte imprudent merchant and get rich stupidly during the credit boom leading to the bust.
Under that situation of massive bankruptcies I would much rather prefer USD Federal notes under the mattress than Gold, much much better.
Politically though it is unfeasible, US is not Cyprus.
The other solution is to affect the denominator, that is expand the base money to reduce the ratio credit / base money.
Merkel wants permanent high debt / base money by neither writing off the bad debt (numerator) nor increasing substantially base money (denominator). Merkel desperately wants a Japanese style debt overhang (wrongly compared to XIX century deflation. XIX deflation would massively erase debts.)
Germans think that the economy works like a linear equation while it works like a differential equation whose sign can go from positive to negative depending on trigger and move into series of self-reinforcing phenomenon until those go exhaustion. At that point the sign changes again and we have another cycle of self re-inforcing phenomenon going into another direction.
Politically though it is unfeasible, US is not Cyprus...
whitenight.....when the u.s. banks find that their new reserves arent enough to cover the tsunami of derivatives, you think its politically feasible to bail them out again??? my guess is not.....which is why i advocate holding thise dollars under the mattress....
the next leg down in this crisis wont be one that involves major bailouts....THATS unfeasible....
I hear your argument Kito, but the derivatives volume are down not up. You might be right, physical dollar notes could work, but that assumes that the Fed can not print money. All governments who could print money decided in the end to go for hyperinflation rather than massive bank failures. I think people should own both some physical Fed Notes just in case.
What you can do is own a bank account in Hong-Kong. Why? It is not a fiat system but a Gold standard system, that is there is a peg of HKD for a monetary asset which is USD. Then you can own say a toll tunnel in HK which pays a huge dividend and has a huge cash flow yield.
If US prints to oblivion, the HKD is the simplest currency to reboot, you just change the peg to something else, anything actually. If the US decides not to bail out the banks, HK banking system could probably handle it ok. You could own HKD bank notes, but if you live in teh US it would not be of any help.
Gold standard was a peg, with a bid price at the Bank of England and an ask price at the mint.
So monetary base is not controlled by central bank but by market, ditto for interest rates, similar to Hong-Kong.
The danger lies within. Modified slightly from another ZH poster:
Fiat can be taxed simply by printing (or creating) more, and they certainly have been (printing and creating more).
Rest assured that treacherous cunt (Merkel) can´t blink until september unless she wants to retire anyway.
The socialists will gladly print all the money the PIIGS could want to pay their voters, so her only shot at another 4 years is keeping her stiff lip about further bailouts.
After the elections she will writs cheques again, no problem...like she always did eventually, like the good puppet she is.
This won´t end well.
If creating value doesn't work then start creating money and destroy value.
We are doomed i tell you.
It's really simple folks. In order to actually create anything of real value, you need energy. If the energy available to humanity is not increasing, then your capacity to grow and produce a real fucking product is dead, period. "Financial products" of mass destruction are not products at all. Fuck the motherfucking paper-pushers already. Throw them all in hard core prisons and let those who's futures they have stolen have their way with these white-collar criminals. This would be the final/ultimate justice.
Agreed, that is why I am long FSLR and making a bundle. Sun is sending 8,000 times more energy per day than the world consumes, yet the energy produced by Solar is right now only 0.1% of Oil alone. Expectation is that we will get maybe to 10-15% in 15-20 years of TOTAL. That is between 10,000% to 15,000% higher at the low end because I was counting oil alone not the total. Shorting one or another Solar companies make sense because you have air pocket in teh cycle and some companies will not survive, shorting the whole industry is like committing suicide.
http://www.larsschall.com/2013/05/08/governance-issues-at-the-world-bank...
.
World Bank a security risk to the world order?
Mai 8th, 2013
....
"..L.S.: You assume that a world-wide currency war is certain if the World Bank fails to adhere to the rule of law. How do you come to this conclusion?
K.H.: It’s a very important question. You can see definite signs of an impending currency war by the US government’s seven year delay in complying with Germany’s request to repatriate 300 tons of gold; the difficulty in obtaining gold for immediate delivery; Japan’s devaluation; and legislation in a dozen states to recognize gold and silver bullion as legal tender. I elaborated on this in a recent interview with gold and precious metals expert, Tekoa Da Silva. (6)
I have been warning for nearly ten years that US’ failure to play by the rules at the World Bank would end in a currency war. I come to this conclusion because one of the things the World Bank is, is it’s a knowledge bank. You have very clever companies that have developed services that they would like to incorporate in World Bank projects. For example, I was working on a project in Ghana on a freedom of information law. The Ghanaians hired the Sentia Group, headed by Jacek Kugler, former Chair of the Department of Politics and Policy at Claremont Graduate University He was President of International Studies Association (2004-5) and Peace Science Society (1995-6). He was also editor of International Interactions,
The model developed by Jacek Kugler is 90 to 95% accurate. (7) There are actually two models that I am relying upon. The published version is: “The War Presidency: Options Taken and Lost.” (8) This analysis holds that what the United States did in the Iraq war may have made some sense in the context of the regional problems, but it was absolutely suicide for the US to fly in the face of its major allies. If the corruption in the United States continues to jeopardize the US’ relationship with the NATO countries, (which we are now seeing in the refusal of the United States to comply with Germany’s request for repatriation of its gold), China would come way up very, very fast, but via a currency war that will force trade back to a barter system and disrupt the world economy on a scale that will make the great depression of the 1930?s and the recent world depression in 2008 pale by comparison.
I found out in the Ghana project using the Sentia stakeholder analytic tool that the reason that the freedom of information law was not being passed was because the German government, which was financing the project , wanted a perfect freedom of information law. It turned out that in Ghana the people who were opposed to the law had enough political power that they could prevent the law from being passed. Once the German government understood that there was no ownership in Ghana for a perfect law, the local version of the legislation passed.
I was fired illegally as a legal officer of the World Bank trying to keep the World Bank on track in the securities markets. I informed the US Congress that the World Bank was out of compliance on the capital markets, and was illegally fired in retaliation. So I thought I would be reinstated immediately. I didn’t understand that the single biggest impediment was the fact that that group that I was talking about, the one that’s dominating the capital markets, is also dominating the media. I didn’t realize how concentrated the media was in the United States.
In the last 20 years the number of owners of the media in the US has gone from 50 down to 5. So I couldn’t get my story out. (9) I can regale you about what happened with the National Press Club, which has been hoodwinking the American people by censoring important information. When we are finished ending the cover-up of corruption, the media will have admitted that it was certainly newsworthy when the governors, attorneys general and chief justices of the 50 states were involved in resolving this illegality. How can it be that the American people don’t know this now? That is why I’m so grateful to you for bringing my story to your readers. " ..
Nice link, thx...
very interesting read (link), Thank You
ECB promoting Asset Backed Securities - cue the radiation leak klaxon.
CTRL-P vs CTRL-Nein
Germany is joining this printing frenzy too? Damn, we're so screwed.
http://kingworldnews.com/kingworldnews/KWN_DailyWeb/Entries/2013/5/8_God...
Not only is printing money a proven total disaster in all prior cases, but illegal in all these places too as far as I know, in the U.S. it's certainly unconstitutional, so how did everyone jump on this so suddenly with such wild abandon? Did a comet with full retard dust fly by the earth a few years ago?
This whole crisis was planned and executed by Wall Street, in coordination with the Bush Administration, timed to occur at the end of "W"s tenure. They had no idea it would be so wildly successful and the sheeple would fall for it hook line and sinker. "Give us 780 billion dollars or the world is going to end!". Now Goddamnit!!!
When they saw how easy it was going they just fucking piled on and monitized more debt to give to Wall Street. Obama is/was totally in on this shit because of the fact that he reappointed the criminals who perpetrated these financial crimes against humanity. The .01% planned this shit and installed a black dude in the WH to distract us all from the crime of the millinium.
If you look back the very first stimulus money was used to hire 100,000 more cops and buy them armoured, fucking, assault, vehicles in case something like OWS occurred. They sure did shut that down in a heartbeat and after all the false flag shit going on they will not hesitate to blow holes in you if you dare protest.
Printing money? Please spare me! If you think this shit is anything other than organized crime, which I don't believe you think, your just naive.
If you don't work for the Gov't, at a bank, or on a farm, you don't have a fucking job paying more than minimum wage.
'Germany under pressure to create more money'
'Obama under pressure to keep lying'
'Bankers under pressure to find more profits'
'Sun under pressure to rise'
'Bernanke under pressure to grow beard longer and tyrannize us all'
The only austerity I have seen since 2008 has been the transfer of money from the people to the banks! I think the TBTF banks need to experience a little austerity!
Tyler tyler!!!
The central banks do not create currency, they create base money.
The ones who create currency against bad credit are banks.
Now with the banks swapping base money for bad assets, the banks have more and more money backing the currency they have created instead of bad credit.
The result is that the fiat money is more and more backed by dubious assets financial assets. The US Fed is the bad bank effectively.
That doesn't matter because the Fed has monetized all bonds and markets, so in the end they own everything, regardless of what it's 'value' is. What does it matter to them? It didn't cost THEM a damn dime to buy everything month after month!
Meet your new landlord, the Global Central Bank! And it all happened with the permission of everyone to 'save them' and make the markets go up.
It always matter because central banks have failed or almost failed in the past. In the old it would result in the Bank stopping convertibility of paper to Gold like the Bank of England in 1797 or the central bank would need a bailout like the Bank of England in 1825. Today a central banks fails when there is a deficit between what the bank has to pay and what it receives, the Central bank would print the difference, and that would be the definition of hyperinflation.
NO the central banksters don't FAIL, they planned the collapse to follow on with monetizing the debt! Seriously dude, you're WAY off base here! You REALLY think these guys are just flailing around like a 3 Stooges movie? BULLSHIT, it's exactly what they planned to do all along they didn't FAIL at anything, monetizing the debt was the whole plan all along!
Well, it is a matter of terminology,
I call central bank failure hyperinflation, you say it is not failure. The central banks do not go bankrupt ok, agreed.
A central bank can become insolvent as long as it is liquid. At some point the central bank becomes illiquid and covers this illiquidity shortage by printing more money. In other words the interest received on assets do not cover what the central bank has to pay on reserves.
Noticeably the Fed started to pay interest on reserves post 2009 (which are supposed to be money and ergo should not carry interests).
Just a terminology, but yes I did not mean that the Central bank would go chapter 11.
Da money gotta come from somewhere.
Can Benny hide swaps big enough to cover Spain? Can Angie hold out long enough to get re-elected and then renege? Will James Bonds come to the rescue?
Stay tuned for the next episode of 'Print Your Way To Prosperity' Euro Style.
Of course they are creating money.
They are printing the new Deutsche Marks to keep in readiness for the exit from the Euro
SCHADENFREUDE!!!!!
https://www.youtube.com/watch?v=nCQGQ5qBQTA
"However, the German elite has long seen the EU as an opportunity for acquiring the empire Germany has for so long desired."
Would you mind to bolster these claims with verifyable facts?
Because this sounds more like your personal and rather prejudiced opinion than reality.
The Fed doesn't want Germany out of the Euro. They want a sleepy Euro that can't become the new reserve currency.
So Germany doesn't get its gold.
Germany should leave the Euro anyway, and start printing as many deutchmarks as it will take to hold the currency down enough to allow them to export.
Unfortunately, that will give them hyperinflation -serves them right.
Ever since peace suddenly broke out n '45, the Krauts have been pussies.
I can promise you that Germany is still filled with badasses. The problem is its politically incorrect to be a badass here, we are expected to be meek, and reverant to the other cultures of Europe who are apparently our equals.
Its bullshit really, and good ol' Adlof was off the mark. Geneticially we are the same as everyone else. Culturally -- we are superior.
"reverant to the other cultures of Europe who are apparently our equals"
first: reverent, not reverant - second: are you really German? not the first time I'm asking this - third: if you really think that German culture is superior to other european, are you sure that you do carry part of this superior culture?
feel free to expose your views on metaphysics or Hegelian dialectics, btw
First - thanks.
Second - Half. As I've said again, and again.
Third - Probably. I'd hope so. I just don't buy into the bullshit Berekely School of Sociology that all cultures are of equal worth and are equally worth preserving. You clearly do. We have to disagree, but I have a whole string of barometers that would care to disagree with your idea.
lol - a late reply, just for fun: all cultures equal? no. but thinking that the own culture is superior is... often not a sign of cultural superiority, and often the sign of a different kind of superiority, coupled with ignorance about other cultures
"Germany under Pressure". Really? What 'pressure'? Since 1945, Germany has always done what the US (DC & Wall St) has told them.
Any other questions?