The Federal Reserve has pursued the unprecedented monetary policy of lowering rates to zero and increasing their portfolio from 500 billion to over 4 trillion. But as the Fed reminds us, there is a cost.
As all experience from the past clearly demonstrates, it is a mistake to believe that the gold price is set solely by dollar interest rates, or its relative strength in other currencies. This being the case, the current weakness of the gold price is simply a reflection of temporary dollar shortages, and nothing more.
The fog of war, coupled with the output from multiple propaganda machines, makes it difficult to determine which side has the upper hand in any conflict. In Syria, it appears from recent reportage from Aleppo that President Bashar al-Assad’s forces are getting the upper hand. But are they?
Former Dallas Federal Reserve Bank President Richard Fisher recently gave a speech identifying the Federal Reserve’s easy money/low interest rate policies as a source of the public anger that propelled Donald Trump into the White House. Mr. Fisher is certainly correct that the Fed’s policies have “skewered” the middle class. However, the problem is not specific Fed policies, but the very system of fiat currency managed by a secretive central bank.
China has unveiled plans to impose "capital controls" on Chinese merger activity overseas, intensifying efforts to slow a surge in capital fleeing offshore amid tepid growth and an uncertain economic outlook.
In today’s world, reaching the magical “millionaire” mark of a $1 million net worth is less meaningful than it used to be. In fact, roughly 9% of households in the United States have “millionaires” living in them – this is a record amount, caused partially through the devaluation of currency over time.
Mr. Trump rather unfortunately may find that his chief task will not be the management of this Great Re-orientation, but more prosaically, fending off the headwinds which he will face as he hauls on the tiller of the economy. In short, there is a real prospect that his ambitious economic “remake” may well be prematurely punctured by financial crisis. These headwinds will not be of his making, and for the main part, represent the accumulation of an earlier monetary doctrine which will fetter the President-elect into a small corner from which any chosen exit will carry adverse implications.
Hayek’s The Road to Serfdom described how personal freedoms are progressively eroded by the state in the name of the common good. In the main, the serfs are patient and tolerant of their masters, but in a democracy, the establishment behind the state risks being challenged. And that has happened twice this year, first with Brexit and now with Trump in America... but remember the serfs never win, as Hayek recognised.
While Chinese policymakers have taken the yuan's recent slide in stride, they are getting ready to slow its descent - i.e., sell reserves - for fear of fanning capital flight if the currency falls too quickly through the psychologically important 7-per-dollar level, Reuters reports citing policy advisers.
While the Renminbi basket (Chinese currency basket relative to biggest world trade partners' currencies) has been 'stable' for almost 5 months, the catchdown in the Yuan's purchasing power against the US Dollar is accelerating rapidly. Busting through 6.90/$ in early Asian trading, the last time offshore Yuan cratered this quickly, stocks plunged in January. The question is - how much further can the Yuan fall before the Trump bump gets damaged?