Central Banks

"So much of what we now accept as routine in financial markets would have been thought impossible prior to the 2008 crisis ?- the next logical stage in the global currency war will be direct fx intervention!"

- Albert Edwards

If you had any confidence in your ability to understand The Fed's future course of action, Fed vice-chair Stanley Fischer just destroyed it in a speech in San Francisco that beggars belief in its CYA hedgedness...

"I hesitated on doing this but I literally owe Etrade $106,445.56 as of this moment what would you do if you were in my situation?"

Having detailed the "perverted nonsense" that is the collapsing and negative US swap spreads (here, here, here, and here) and noted money manager's concerns that the big question remains whether there is "something bigger brewing under the surface that so far hasn’t been pinpointed yet," it appears Goldman Sachs feels the need to 'explain' the anomaly in what appears an effort to calm fears about the broken money markets. Of course, we don’t have to figure out what the “market” is saying about a negative spread because it isn’t saying anything other than “something” is wrong and even Goldman admits this signals funding and balance sheet strains are worsening since August.

Central planners around the world are waging a War on Cash because, as Ron Paul so eloquently put it "the cashless society is the [government]’s dream: total knowledge of, and control over, the finances of every single [citizen]." It is perhaps ironic then that Sweden, which became the first country in Europe to issue paper money in 1661, is probably going to be the first in the world to entirely eliminate it.

"The equilibrium, for now, is QE infinity – but political risk could be the breaking point"...

Stripped of accounting gimmicks, real GDP growth shows economic collapse. And it will culminate in another stock market crash.

I had never heard the term "safe space" until just a few days ago, but it's a zone in which free speech is completely forbidden, for fear of hurting the feelings of some special snowflake.

Interest rates across the developed markets have been kept at emergency levels (and all time historical lows) for seven years. Do we think that allowing banks to access essentially free money is more or less likely to give rise to the sort of malinvestments that caused the financial crisis in the first place? If you believe that the answer is ‘less likely’, there is a job at your local central bank with your name on it.

This is the REAL picture of the global economy. It isn’t what CNBC and the talking heads tell you. It is economic collapse.

Once you examine the finer details, it quickly becomes clear that there are five key reasons that the Fed is unlikely to raise rates anytime soon.

"Japan’s experience suggests that QE has its limits, and could bring a range of side effects. These include years of tepid growth, the reduction in secondary trading liquidity, an increase in asset ownership by central banks (the BoJ now owns half of the national ETF market), potential formation of asset bubbles and social problems like inequality."

"New banknotes were being delivered daily in boxcar loads. In October 1923, banknote circulation amounted to 2,496,822,909,038,000,000 and everyone called for more. It is this last fact that is most telling, that every group believed that the solution was simply more money. They failed to grasp that what was needed was to simply cease all manipulation of the system and let the free market return. Their failure assured that the only possible outcome was the collapse of the system."

The notion of free markets, mechanisms where buyers and sellers can meet to exchange securities or various kinds of goods, in which each participant has access to the same information, is a fallacy. Transparency in trading across global financial markets is a fallacy. Not only are markets rigged by, and for, the biggest players, so is the entire political-financial system.