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Tag Archives: money printing

Dollar Supply Creates Dollar Demand, Report 2 June

We have been discussing the impossibility of China nuking the Treasury bond market. We covered a list of challenges China would face. Then last week we showed that there cannot be such a thing as a bond vigilante in an irredeemable currency. Now we want to explore a different path to the same conclusion that China cannot nuke the Treasury bond market. To review something we have said many times, the dollar is borrowed. It is not printed. Every time fresh new dollars are created, there is a...

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Fed Considering Using Quantitative Easing “More Readily”

Once upon a time, quantitative easing was considered an “extreme measure.” But it may become more commonplace. According to a report, central bankers in the US are discussing whether they should turn to that “tool” more often.In other words, the Fed may make the “extreme” the norm.Last Friday, San Francisco Federal Reserve Bank President Mary Daly said they were discussing whether QE bond-buying should be an emergency measure only, or if the central bank should use the tool more...

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More Data For The ‘Data Dependent’ Fed To Ignore

The University of Michigan released its September update for their surveys of consumers. The overall index of consumer “sentiment” was unchanged from August at 89.8, and up just 3% from last September. This “confidence” index peaked in January 2015 at 98.1 and has been sideways to lower ever since. Most of the internals were practically unchanged throughout, leading Chief Economist Richard Curtin to note: …modest gains in the outlook for the national economy have been offset by small...

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The Inequality of Logic Behind The Increasingly Emphasized Magic Numbers

It is a basic element of logic that if A = B and B = C, then A must also equal C. In terms of action, if I do a thing and that thing always leads to a predictable outcome, not seeing that outcome causes one to question whether or not one actually did that thing. In other words, A must not have equaled B. Central bankers all over the world are stumped. Nothing they have done has led to what was expected when one does such things. In very basic terms, we all know, as history has shown, that...

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Hedging against inflationary money

US interest rates have been held fairly low for quite some time now. The Federal Reserve (Fed) last raised its rate by 0.25 to 0.50 percent on 16 December 2015, but that was but a temporary reprieve. Rates’ long-term backslide has since resumed. US short- and long-term interest rates in percent Source: Bloomberg. The situation in the USA is emblematic of interest rates in many currency areas these days. Borrowing costs have hit rock bottom or close to it. Ten-year government bond...

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Did Deregulated Derivatives Cause the Financial Crisis?

Reprinted from FEE.org For a few months in 2008 I naively thought that the disastrous financial “rescue” actions led by Treasury Secretary Henry Paulson would at least be counterbalanced by widespread recognition that our economic turmoil had been government’s handiwork. How wrong I was. By the time of this writing, the mainstream press had delivered the “consensus” judgment that blind faith in the free market fostered the housing bubble. Jacob Weisberg’s Slate column, “The End of...

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The European Basis For New Monetary Science

Looking back it almost sounds like a completely different world. In the end, however, the world hasn’t changed, perceptions have. On May 10, 2012, German newspaper Spiegel reported that Bundesbank’s (Germany’s central bank) chief of its economics department, Jens Ulbricht, testified in the German parliament that German inflation was likely to be, “somewhat above the average within in the European monetary union.” What happened after it seems amazing in retrospect. The Financial Times...

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Japan Data Dump——-Mostly Dumping All Over Abenomics

Ten days ago, it was reported that the Bank of Japan for the first time set aside reserves against expected losses should its massive portfolio of JGB’s finally move toward QQE success. The main part of all this “stimulus” has been the accumulation of primarily government bonds at massive premiums. If it were ever to actually work, then the Japanese central bank will have the very good problem of a winning economy causing financial losses as market-determined interest rates rise. To account...

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The Debt Offensive

Reprinted from Taki’s Mag God help Donald Trump’s critics. The paroxysms they have after the mogul–turned–GOP nominee’s policy pronouncements can’t be good for their health. The latest is a real hoot. For dealing with our enormous national debt, Trump wants to do what he does best: negotiate with creditors. How so? By pressuring bondholders to accept a haircut on their payments. And if they don’t like the terms? Well, they’ll get their money by hook or by crook. In an interview with...

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Draghi’s Duplicity: QE Works Because QE Works——–Even Though It Hasn’t In The Slightest

The prevailing view is that the ECB will add to QE tomorrow in accompaniment of a further negative deposit rate floor. Whether or not Draghi and his orthodox economists have the gall to shunt the MRO midpoint below zero remains an open question, but what is less uncertain is that despite just about a full year of actual QE there is nothing to show for it. Even stocks, which were once so easily captured by the illusion, no longer react to the show. Mario Draghi is having no success...

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