“Those with access to the low-interest unlimited credit spigot of the Federal Reserve are free to snap up tens of thousands of houses and tens of thousands of acres of productive land, along with other rentier assets such as parking lots and meters, fossil fuels in the ground, and of course the engines of credit creation, the banks. Should a legitimate (as opposed to black market/cash business) small business manage to open its doors, it faces a blizzard of junk fees, permits and taxes that make its survival a dubious prospect. No wonder self-employment and small business are in structural decline.” Continue reading

Tax Collectors Grow More Aggressive; Payers Caught in the Middle

“Her Majesty’s Revenue & Customs doesn’t have enough power, or so the British Parliament is told. HMRC wants to be both judge and jury when it comes to recalcitrant taxpayers. It wants to the ability to ‘raid bank accounts’ and to do so without a court warrant. What comes across clearly in both the IRS stance and in the requests by the HRMC is a certain level of arrogance that is magnified by modern communication facilities. The pushback against intrusive tax collection is growing, even as agency demands for more power and revenue are expanding as well.” Continue reading

More Jawboning from Australia’s Central Bank

“RBA Governor Glenn Stevens proceeded from characterizing the level of the exchange rate as ‘uncomfortably high’ to noting ‘that foreign-exchange intervention can, judiciously used in the right circumstances, be effective and useful.’ That latter observation was particularly noteworthy because, according to The Wall Street Journal, a currency intervention has essentially been verboten in the decades since Australia shifted to a floating exchange rate in 1983. He closed his remarks on this particular topic with an even more overt statement: ‘Nonetheless, we think that investors are under-estimating the likelihood of a significant fall in the Australian dollar at some point.'” Continue reading

Finance Goes From Foe to Friend in Hollande Government

“During his election campaign in 2011, President Francois Hollande famously called finance his ‘greatest adversary.’ In a speech today, French Finance Minister Michel Sapin called finance ‘a friend,” quickly specifying that he was talking about ‘good finance.’ The new stance comes as the president’s popularity is at a record low and his economic policies have drawn the ire of members of his own Socialist Party and of allied groups. Recovery remains anemic and joblessness is at a record high. Global finance, however, has stuck with Hollande. Investors have piled into French bonds, giving Hollande’s government borrowing costs that are close to the lowest on record.” Continue reading

“Once upon a time, most paper currency in the world was backed by gold and directly exchangeable for it. On August 15, 1971, US President Richard Nixon ended the Bretton Woods System (Ghizoni, 1971), in what is now known as ‘The Nixon Shock’, allowing all currencies to float freely, with only the backing of the faith and credit of their issuing sovereign state. This type of currency is known as ‘fiat currency’, i.e., currency that is given value by government decree (Keynes, et al., 1978). This report will not discuss the relative merits and drawbacks of gold-backed currency and fiat-money, only the triple-bottom-line impacts of each.” Continue reading

If this story didn’t have a Bloomberg byline, I would swear it was from last night’s edition of The Daily Show. Hospitals are now buying consumer purchasing data to figure out who smokes, who has a car, and who shops at Walmart or Whole Foods. The idea is to identify high-risk patients and help them choose a different path before it’s too late.

Does anyone remember Snowden? Does anyone still think big institutions can manage enormous sets of data carefully and ethically? What are the chances that the bottom line will win out over individuals? Continue reading

“Federal Reserve Chair Janet Yellen said Wednesday that she doesn’t see a need for the Fed to start raising interest rates to defuse the risk that extremely low rates could destabilize the financial system. Yellen said she does see ‘pockets’ of increased risk-taking. But she said those threats could be addressed through greater use of regulatory tools, such as higher capital standards for banks. Some critics of Fed policies have warned that the central bank could be setting the stage for another dangerous bubble by keeping rates so low for so long. In her speech, Yellen said she didn’t see dangerous excesses in the financial system.” Continue reading

“Consumer prices in Japan rose at an annual rate of 3.4% in May, the fastest pace in 32 years, as the effect of the sales tax hike from 5% to 8% started to be felt. The price growth in May follows a 3.2% jump in April and is a big boost for Japan’s attempt to trigger inflation. The country’s central bank has set a target of a 2% inflation rate. The measures, which include boosting the country’s money supply, have started to have an impact and consumer prices in the country have now risen for 12 months in a row. Policymakers have been hoping that consumers and business will be encouraged to start spending and not hold back on purchases, as they may have to pay more later on.” Continue reading