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What Happens When A Money Printer Finally Crashes
This is just too delightfully ironic to pass by.
In a world in which nobody has any faith in the capital markets because over $10 trillion in central bank liquidity has been injected to prop out a fragile house of risk asset cards...
... the one place one should have faith (because let's face it: monetarism is the only religion that matters in today's world) is that money will be printed for the foreseeable future, certainly metaphorically and also quite literally.
Alas, things did not quite work out that way for the company which, well, prints money (but sadly is not a central bank) when earlier this morning the shares of De La Rue, the company responsible for printing Bank of England banknotes, plunged a record 30% after it issued a profit warning.
Wait, a money printer losing money? Surely you jest.
Actually, no. From the BBC:
De La Rue, which prints banknotes for several countries and also makes the UK's biometric passports, warned that trading conditions had "deteriorated". Profits for this year are now expected to be £20m lower than in 2013/14.
The company said prices and margins for its printing services and secure paper used for banknotes were being squeezed.
Wait for it.... wait for it...
It also said rates of growth in new business had been slower than expected in recent months, and said the global transition to biometric passports, which it also makes for the UK government, had been "disappointing".
Guest that's what happens when you put all your chicken the money printing basket, and the head of the central bank suddenly gets cold feet on more printing.
Analysts say its banknote printing business is the real cause for concern. Earlier this month the company was named as the preferred bidder for a new 10-year deal to print Bank of England notes, but the value of the contract is believed to be lower than expected. The deal includes printing the Bank's next generation of plastic banknotes.
Kevin Doran, chief investment officer at Brown Shipley, said he suspected the Bank of England had behaved "more commercially" in demanding a lower price from De La Rue for the renewed contract and said other central banks may now follow suit, squeezing margins at the company further.
"The profits warning is the result of pricing pressure being seen in the banknote printing business, including in the renewed deal with the Bank of England," he said. "But the £20m isn't a one-off - when [the company's] existing customers come back to renew existing contracts they will push for the same price reductions that the Bank of England has demanded."
So... the Bank of England is ok with FX rigging and leaking confidential FX information to traders, but it has a problem with paying full price to the people who actually print the money?
But the punchlines don't stop there:
De La Rue has been involved in making banknotes for more than 150 countries, and passports or identity systems for over 65 governments.
De La Rue said it expects "the current difficult market conditions" to continue into the next financial year.
The company's board said it was now reappraising the level of the dividend "in light of this more difficult trading environment".
It expects to announce an interim dividend of 8.3 pence per share in November. Analysts had expected about 14.1 pence.
"While disappointing to announce this trading update De La Rue, as the market leading banknote printer, remains a strong, profitable and cash generative business. We will continue to pursue efficiency gains, invest in the business and in R&D for the future," said De La Rue chairman Philip Rogerson.
Like we said, ironic, but hopefully not too ironic and not a harbinger of what happens to the other type of money printer, the central banks themselves when their particular business model also comes to an abrupt end.
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input costs are a bitch...
I smell the Onion...
I read this as more and more widespread use of digital transactions vs conventional notes. Also is indicative of the fact that govvies don't like people having or transacting in cash. Too hard to monitor, track, and tax.
Makes sense, no? If not, go to your local bank and ask to withdrawal $2,500 in cash and see what they say. The trend is to move everyone into a traceable system and away from cash.
Last time i post this.. but the Truth about the Fed is being restricted by even FOX. https://www.youtube.com/watch?v=qLpXv6ICre8
What do you think would happen if people knewn about it.. The Money vol would tank
Imagine their losses when the dont have to print government backed crypto?!?
Last time i post this.. but the Truth about the Fed is being restricted by even FOX. https://www.youtube.com/watch?v=qLpXv6ICre8
What do you think would happen if people knewn about it.. The Money vol would tank
I thought only Walmart can tell a supplier what to price their wares at.
I actually tried that one.
Teller asked me what I intended to do with it.
My answer: Spend it.
The look was worth it!
Easier to just get $100 cash back with every small purchase you make.
Not worth the paper it's printed on comes to mind.....
They should look on the bright side - at least they're not a gold miner.
A: They re-boot with SDRs. Note that the SDR is made up of the fiat currencies of these four CB's.
No wonder that the BRICS and the rest of Prison Planet is pissed. Duh!
When I used to live in Havant, Hampshire, they occupied the big prestigious office block on the corner of Havant Road and the A27. Very modern, very swish, obviously "lots of money" there, but that was 20 years ago.
lets see, with more people being born everyday will need more money to buy more stuff! Got it thanks.
Eat money
Hold the phone! Why dont they just take out some loans to buy back their shares thereby increasing earnings per share pushing the stock to new all time highs where they can cash out their stock option bonuses to buy more yachts?
It works in 'merrica.
Show me the P/L for the company that sells the BOE their toner cartridges.
We're having trouble making money since the price of ink and paper went through the roof, but there's no inflation.
So why the fuck can't someone build a fire at the printing press center(s) at the U.S. Treasury and "De La Rue" along with the computer(s) that manage QE infinity?
Or at the very least... Import the best of the best at ISIS/ISIL to chop all the heads off of the "heads" at the Bank of England and Federal Reserve???....
The printers to prosperity are running out of paper. The real economy is losing it's mind.
But I just heard the financial guy on CNBC say, "the GDP grote first half of 2014 was a Robust 4%."
"There's never been a better time then now to be delusional," my brother says. "It's like mass hysteria."
On the bright side I do see lots of houses and raw land correcting. Where you could not touch land for less then $10k/acre before, it's now sitting there at less then $6k/acre with no takers. Another 40-60% and we'll be back to normal; namely, where the price should be.
It's all just 1's and 0's...
No ink, just electrons.
Fascinating...this might be how deflation hits...when hard cash carries a value premium over 12 zeroes typed behind a number on a computer screen. It's all made up numbers anyways, might as well just rewrite the books to sponge the leverage from the system. It'll take out grandma's bank savings and 401ks too, but that's the price you pay for keeping that shit with BofA.
But what I really wonder is how long before the loyal employees of a money printing place turn to cash and carry themselves? It seems the NWO never got the memo about their being certain services that they shouldn't haggle over...
Do they also print rolls of soft money... Might be a niche in some places soon.
Maybe presto logs would be a good alternative in the near future.
They will know how to stay in business. Look at their R&D. How about persuading the Central Banks for the need of RFID and geolocation technologies in high denomination (initially) notes...
bullish the return of cotton slaves
Swing low sweet armored car
Thin air has a receipt and apparently it is more expensive than anyone ever imagined.
Cash will be phased out .
Then banks will have full control of monetary systems and transactions .
Except for bitcoin an the like .
The last hurrah for general financial freedom .
Ass, grass or keep walkin'.
Why doesnt the Bank of England just say "print yourself a few extra on us?"