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150 Years Of Global Monetary Policy Summed Up In One Word (And 1 Chart)
"Zero..."
With all the "talk" of diverging paths of monetary policy... one could be forgiven, if glancing at the chart above, for thinking the inevitable endgame of Keynesianism is very much at hand as first The BoJ, then The Fed, then Europe all enter ZIRP... and now NIRP...
Source: Goldman Sachs
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Source: Goldman Sachs
The Squid has it's tentacle marks all over those rates...
Source: Someone with a lot of freaking time to waste.
Goldman doesn't hash data for the hell of it. To be sure, this information was compiled and released for a reason, probably because they have figured out a way to steal even more money.
Yes- the largest piece of relevant information from the whole fucking chart was "accidentally" left off: 1971 removal of the dollar from convertibility into gold by foreign countries. You know, the "thing" that caused 400% inflation of imported items and real estate over the following decade?
Fucking losers. Manipulation of opinion through careful omission of key facts.
Interesting how it was France that called our bluff on the bullshit $35/oz manipulated price of gold in the 60s when it began unloading $US reserves in exchange for our WWII hoard kept at Ft Knox.
Now it's China and Russia taking a page from that play book. Nixon stopped that game after we lost a third of our gold reserves by closing the gold window. When will they stop this time? After there are no more countries weak enough to loot?
http://hedgeaccordingly.com/2014/12/san-francisco-fed-president-dr-john-...
Could you please give it a rest on pimping your blog?
Fuck me....
He's got to feed his kids. McDonalds isn't hiring.
Which is odd. Despite being entirely unhealthy and performing poorly overall, have you seen some of the lines that form at those drive-throughs?
Not far from where I live is a McD's with 2 drive thru lanes. I've seen on numerous occasions both of those lanes backed up all the way out to the street. For PINK FUCKING SLIME BURGERS!!!!!!!!
The drive through lanes can be attended by someone in a call center, and the soda fountain is completely automated. Seattle is testing out self-checkout kiosks.
Why would they be hiring?
Yeah but someone has to pick up the trash. I love pigs.
Gold Bitchez....I pick up pennies
CPRP coming soon
c = confiscated
p = principal
That would reduce the money supply, would it not? Nothing the CBs are doing suggests they want that.
There is a lot of evidence, however, that they like to steal.
Normalization is a code word for "We're not done lying to the public yet about inflation rates versus bond rates."
"Zero"... Hedge accordingly.
Because I know how much I don't know, I don't mind putting this forward: When I see what Wall Street is currently doing to America, then I read (in what is supposed to be the autobiography of satan himself)
"While the 'banker' sold the freedom of the nation and betrayed our 'land' to international high finance, now again he succeeds in causing the two denominations to assail one another, while the foundation of both are corroded and undermined by the poison of the international world 'banker'
In all honesty and sincerity.....WTF is going on? It's not that I failed to attended history class. I am starting to think my mistake was attending one in the first place
Or,
IRP = irrelevant rate policy, with
ZIP = zero improvement potential
Banksters gotta live too, doncha know?
S/
The Global Monetary Reset is under way, but people have not noticed it yet. The key is the move to Zero interest rates.
Government debt almost everywhere is too high to ever pay off, let alone pay a traditional rate of interest on. As debts come due, including as bond issues mature, the only option governments have is to roll over the debt and accumulated interest, and the only way they can afford to do that is if money printing is a continued practice and interest rates are at or near zero. QE is the latest name for money-printing, inflating the amount of currency available. Logically, QE dilutes the value of a currency by inflating the number of currency units in circulation, and, theoretically, should lead to price inflation. However, if all nations engage in monetary expansion, the effects of money printing on exchange rates may be effectively concealed by a balance of expansion. Or, as in the case of the US dollar, a currency with the status of world reserve currency may be expanded with relative impunity by the nation creating that currency, effectively exporting its inflation to the rest of the world that continues to sell to that nation, or trades in a monetary system based on that currency. Injections of QE into an economy with weak fundamentals is likely to result in speculative bubbles as QE funds show up in investors' hands and not in the hands of general consumers.
Inflation has become a necessary element of economic life according to the mainstream meme of economists. Inflation is a key strategy in coping with immense and increasing debts. Debt so large that it cannot be paid must be inflated away or governments must default. Deflation makes current debt increasingly difficult to pay or service out of deflating GDP and tax revenue.
Exporting nations have engaged in competitive exchange rate reductions to gain or maintain competitiveness for their exports. A strong currency hurts export competitiveness but lowers the cost of imports. A weak currency raises the cost of living of residents who must buy imports - a common feature for nations that import oil, for example. There is a necessary balancing act between export competitiveness and consumer price inflation, regulated often through exchange rate manipulation. Some of the Euro zone nations are learning the painful effects of locking themselves into one currency and losing the ability to use exchange rates to maintain export competitiveness.
The monetary expansions of the past ( done to re-inflate the world economy when it met a crunch - thank you Greenspan and successors) have flooded the world with currency. That currency has expanded speculation portfolios to the extent that the volume of currency sloshing around in search of returns or safety can quickly overwhelm a country's financial system and trade relations (competitiveness impaired, artificial investment bubbles, sudden debt crises when money is withdrawn, etc.).
The international trade and financial systems have made most countries relatively defenceless against trade and, more critically, capital flows. Vast sums can flow in or out of a country and its currencies almost instantaneously via computer clicks. Huge profits and losses can be made betting on exchange rate fluctuations, and on manipulating those exchange rates. ZIRP and NIRP are now regularly employed, ostensibly to dissuade residents from hoarding cash rather than adding to monetary velocity by spending, but ZIRP and NIRP are also used to dissuade speculators from buying a country's currency and hence raising its exchange rate.
Traditional stores of value and media of exchange among central banks - precious metals- have been debased through price manipulation in paper markets.
The strategies that seem unique and strange, and contrary to tradition - rampant money printing, the monetizing of debt through central banks buying government bonds, ZIRP, NIRP, and the suppression of precious metal prices, are the necessary strategies of a new monetary system set up to cope with the problems arising from monetary excesses of the past. They are the new normal. By disabusing the public of the notion that currency should be a stable store of value, that saving is a virtue, and that money borrowers should pay a reasonable rent on the money borrowed, the monetary authorities are conditioning the public to the new normal. In the paradigm of Modern Monetary Theory, currency creation can continue to infinity without destructive inflation since interest rates and expectation of return on lent money can be maintained at or near Zero. Any interest rate significantly above zero will crash the system, so do not expect interest rate increases except as a short-term emergency strategy to counter a fall in the exchange rate of a currency.
Necessity is the mother of invention, and the necessity of coping with overwhelming debt and unfunded liabilities has led us to the invention of Modern Monetary Theory. Add to this the new rule of bank bail-ins, the rule that bank deposits are part of a bank's capital, and the pledging of the public purse to bail out bank losses. This is the public/government debt side of the strategy. For those with large sums of currency who wish to continue to speculate, there are the stock and commodities markets, and the casino is open for derivatives bets. To accomodate the speculators, we have seen the insulation of Wall Street from criminal liability for fraud, the repeal of Glass Steagall, the weakening of Dodd Frank, the delay of the Volker Rule, the use of the public purse to bail out Wall Street losses in 2008, and the recent pledging of the public purse to cover Wall Street losses from any future derivative bets losses - all in the CRomnibus bill. Welcome to the New Normal. We shall see how long it lasts.
Monetary policy was a charade even before the world's reserve currency dropped the gold standard, so it's no wonder the shit hawks are circling.
Have you considered a career as a guest poster on Zero Hedge? You're on the right track. If you could double or triple the length of this post and add a few charts and graphs, maybe even a picture, its a lock
Once you get about 10 under your belt you consolidate them into a book and go on tour. Add a store to your website. Do a few podcasts on sites like USAWatchDog. And if you're really lucky you may hit the big time and get on Squawk Box or the Young Turds. After that the sky is the limit
Tin Did u write that? Very concise and very well done.
Your grasp of the obvious is astounding...
..and negative real interest rates to steal the common man's wealth
well written
Zero forever.
Zero ? We are already negative in real terms. We will go netgative nominally as well (see SNB) and that way they will get the remainder of pension funds and savings (but rest assured, this will only be good for the people and economies), and then it is game over, and a new system is implemented.
USD is done. It's not risk-free.
It's really that simple.
So WW3 and WW4 are planned?
"150 Years Of Global Monetary Policy Summed Up In One Word (And 1 Chart)"
Theft, con, grift, fraud, bilk, plunder, filch, steal, fleece, pinch, pillage, snatch, hustle, rip-off, swindle,heist, rob, swipe, purloin, poach...
I was going to do one word too, but then I couldn't decide which one.
The banksters need to repay us.
Playbook
The word "Plunder" would be a good summary.
"Brilliant Central Banker Rudolf Haverstein figures out how to really boost nominal GDP"
Classic, not to be missed, stuff here: https://twitter.com/RudyHavenstein/status/546404140964802560
Spoiler Alert!!
The Prequel: "Prusia kicks France's butt."
This lunacy is an will be reflected by the metals sooner or later. Till then they can ZIRP and NIRP my ever-growing stack all they want.
the Tribe's work for thr past 150 years , no woder why they always get expelled (more tham 300 times so far)
The only priced good that matters is oil.
If oil prices are low/under control/declining, there is no incentive for central banks to raise rates and they wont.
Which means free money for banks to gamble with for as long as the oil stays under 120$
If we start seeing crazy oil prices (sub 30$ oil) we can assume all rates will be forced to go negative.
Oil might just be the end-game black swan event . . . not with a bang or a wimper, but with a "woot gas is free"? 0o
Can the world hold it together (maybe indefinitely) when ALL central banks go NIRP ?? Do the banksters BELIEVE its possible, and are going to try?
Gold goes to a million and just keep going. Houses get stupid, wages get stupid...but the degree of stupidity is always held in check. Knocking zeroes off the end of the dollar until time ends.
Possible?
When inflation meets zero interest rates the "economic efficiency of credit" collapses and the additional money poured into the system coupled with lower rates can no longer drive the economy forward.
At some point the return on loaning money is simply not worth the risk! Why do you want to loan money if most likely you will never be repaid or repaid with something that is totally worthless? When this happens the only safe place to store wealth will be in "tangible assets" and the only lenders will be those who print the money that nobody wants.
When this happens we are at the end game. The collapse of credit will pose major problems such as what we saw when many sellers were forced to demand payment up front before shipping goods in 2008. More on this subject below.
http://brucewilds.blogspot.com/2014/06/the-economic-efficiency-of-credit-can.html
Frankly, the Japan model is the only outcome that makes sense to me, where endless accommodation results in a slow grinding down of saving and domestic economic activity. Thus, it is ironic that deflation results from free money that only goes into paper investments.
I'd like to see a historical comparison to the current situation other than Japan. They, at least, could have taken their assets out of the country. Today, the whole world is awash in expensive paper assets.
For what it's worth my own strategy is rental housing and I'm working on developing a hotel. I figure people will still pay to live somewhere when the shtf and income dries up.
One by one, the bubbles are bursting. The stock market may be the last, but it will be thr biggest and the most catastrophic.
http://www.globaldeflationnews.com/anatomy-of-a-bubble-how-the-federal-r...
Were on the road to surfdom.
Serf's up!
Somehow the Goldman Sachs produced map "forgot" to note that the U.S.'s 1873 economic problems had a little something to do with that year's criminal, anti-constitutional change to the bimetallic standard written into the constitution. All of a sudden millions of americans who had their money in silver coins didn't have legal currency. It was an insane policy choice and one that was guaranteed to crash the economy. But the east coast gold holding interests who bribed congress to pass a law enacting this policy didn't care.
yep, the longer the inevitable is prolonged the coming crash will be much crashier
also, please get rid of the stupid Oppenheimer ad that pops up, very annoying!
There's a song by Chicago that comes to mind.
Where Do We Go From Here
https://www.youtube.com/watch?v=nIGPk_C4OAw