Bullshit Artists

When Zero’s Too High: Time preference versus central bankers

"Central banking has taken interest rate reduction to its absurd conclusion. If observers thought the ECB had run out of room by holding its deposit rate at zero, Mario Draghi proved he is creative, cutting the ECB’s deposit rate to minus 0.10 percent, making it the first major central bank to institute a negative rate. Can a central-bank edict force present goods to no longer have a premium over future goods? Armed with high-powered math and models dancing in their heads, modern central bankers believe they are only limited by their imaginations. More than half a decade of zero interest rates has not lifted anyone from poverty or created any jobs—it has simply caused more malinvestment." Continue reading →

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German Gold Stays in New York in Rebuff to Euro Doubters

"Surging mistrust of the euro during Europe’s debt crisis fed a campaign to bring Germany’s entire $141 billion gold reserve home from New York and London. Now, after the Free Democratic Party, which flirted with bringing the gold home, dropped out of Chancellor Angela Merkel’s coalition and was replaced by the Social Democrats, the government has concluded that stashing half its bullion abroad is prudent after all. Ending talk of repatriating the world’s second-biggest gold reserves is a rebuff to critics including the anti-euro Alternative for Germany party, which says all the gold should return to Frankfurt so it can’t be impounded to blackmail Germany." Continue reading →

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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 →

Continue ReadingFinance Goes From Foe to Friend in Hollande Government

Hawks Take Flight: Why the Fed’s Hypocritical Dialectic Continues

"The Fed's monetary expansion ended in 1929. The 1950s equity rise ended with a bust in the early 1960s. The Nifty Fifty fad ended with the Crash of 1969. The market recovery of the 1970s ended in 1982. The next crash was in 1987. In 1994, an expansion gave way to a recession. A great tech expansion turned sour in 2001. A housing bubble deflated violently in 2008, not just in the US but around the world. And that is where we are now. This expansion has been driven relentlessly upward for some five-plus years. Another year or two and this latest 'Wall Street Party' will be finished. We anticipate a downturn that will be as violent or even more so than 2008." Continue reading →

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Fed Warns Of Crackdown On Leveraged-Buyout Deals

"The Federal Reserve warned it may need to take additional action to rein in banks' funding of corporate takeovers after observing continued deterioration of lending standards this year. The statements were the latest warning that U.S. regulators want banks to end practices they see as risky in so-called leveraged lending markets. The Fed and the Office of the Comptroller told banks in March 2013 to avoid funding takeover deals that would leave companies with high levels of debt. Federal Reserve Chairwoman Janet Yellen said that some bank-underwriting standards had loosened as a response to investor appetite for additional risk, a byproduct of low interest rates." Continue reading →

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Incredible confusions: Why ‘austerity’ if we can just print the money?

"Debt can either be repaid or be defaulted on. Destroying the purchasing power of money through inflation is one way to default on the debt. Simply not paying the debt is the other option. In both cases, savers, ‘thrifty pensioners’, and the customers of banks, insurance companies, and pension funds will suffer, and in the inflationary scenario everybody will suffer greatly. Sadly, the massive printing of money and accumulation of debt that has occurred since the termination of the gold standard and the adoption of limitless state fiat money and pro-growth central banking has now brought us to a point where defaults appear to be unavoidable. This is not some great reset. It is a man-made catastrophe." Continue reading →

Continue ReadingIncredible confusions: Why ‘austerity’ if we can just print the money?

Now China … Reasons for Printing Money Abound

"The tightening talk we're listening to is just for public consumption. The whole system of recovery is based on equity appreciation stimulating employment (which it does ineffectively at best). The big central banks around the world are all pumping money in unison. We will always be told that bankers are concernedly moderating money flows. But then, at the first sign of trouble, the taps are turned back on. In fact, they are never REALLY turned off. And there will always be a reason to push the volume of money even higher. They are planning a big Wall Street Party. The top men always seem to find reasons to print more. Until the world is swimming in currency." Continue reading →

Continue ReadingNow China … Reasons for Printing Money Abound

What Happened to the Fed’s Trillions? Back on Deposit…at the Fed!

"So you can understand why they wanted to have the tool. Now the question is whether or not this tool as it was implemented throughout this financial crisis, and aftermath, has exacerbated the problems with the credit channel. A bank can decide, 'Do I want to give a three-year loan to a risky borrower, or do I want to get 25 basis points at the Federal Reserve? I'm really risk averse right now. I don't really want to lend to anybody so I'd rather take my 25 basis points.' So I believe that at the margin, this has affected the credit channel, the effectiveness of the credit channel." Continue reading →

Continue ReadingWhat Happened to the Fed’s Trillions? Back on Deposit…at the Fed!

Bitcoin and Intrinsic Value: a Layman’s Response to Alan Greenspan

"Once upon a time, at the end of the last millennium, I founded and led the first games company to sell virtual goods or virtual currency for real money. We sold (and still sell) ‘credits’ – virtual currency that is bought for real money, which players can use to buy other things in our games. When I first started selling credits, a lot of people, including almost everyone in the games industry who was aware of what we were doing, thought it was ridiculous. The general criticism was along the lines of: 'Why would someone pay real money for a fake sword?' 16 years later, people are still buying these credits, and they’re even used to pay other people for third-party services around our games." Continue reading →

Continue ReadingBitcoin and Intrinsic Value: a Layman’s Response to Alan Greenspan

The Dialectical Pomposity of the Tapering Promotion

"We might taper, he tells us, if the economy seems strong. We might not if the economy seems less strong. Maybe we will, maybe we won't. And to ascertain the strength of the economy, Bullard and his noobs will parse notoriously unreliable government data. They will make decisions on how much money to print at what price. This is price fixing and price fixing never works. They will use the loony-tune statistics provided to them by the US government. Good luck. They will make determinations about the level of the price fix they shall levy based on these flawed numbers. This is YOUR economy. This is YOUR money." Continue reading →

Continue ReadingThe Dialectical Pomposity of the Tapering Promotion