Economics

Bernanke Advises “Perpetual Bonds” To Japanese Government

"In April the former Federal Reserve chief warned there was a risk Japan at any time could return to deflation. He noted that helicopter money -- in which the government issues non-marketable perpetual bonds with no maturity date and the Bank of Japan directly buys them -- could work as the strongest tool to overcome deflation, according to Honda. Bernanke noted it was an option, he said. Bernanke joined central bank chief Haruhiko Kuroda over lunch this Monday and on Tuesday he attended a gathering with Abe and key officials, including Koichi Hamada, another influential economic adviser. The central bank didn’t reveal what Kuroda and Bernanke discussed." Continue reading →

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Mises Institute President Jeff Deist: “We Have to Decentralize”

Last week, Mises Institute President Jeff Deist released a podcast featuring a discussion about the political future of libertarianism, advising libertarian activists to embrace decentralization and de-federalization as a foundational strategic goal. “The only way we can get along is to de-yoke from Washington,” Deist said on the Patriots Lament radio show. “We have to…

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Republicans Maintain Unconstitutional Status Quo; Kill Industrial Hemp Bill in South Dakota

PIERRE, S.D. (Feb. 22, 2016) – After passing the House by a 57-11 margin on Feb. 4, five Republican senators killed a bill that would have legalized industrial hemp for commercial production and distribution in South Dakota. Rep. Mike Verchio (R-Hill City) along with a bipartisan coalition of 39 cosponsors introduced House Bill 1054 (HB1054) earlier…

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Households lost from quantitative easing; gov’ts, big business won [2013]

"The big winners, to the tune of $1.6 trillion by the end of 2012, were the governments of the US, the UK and eurozone, from the reduced costs of servicing their debts and from the increased profits made by the their respective central banks (who magically create money to buy government debts which pay them interest). McKinsey believes that households have been significant losers from cheap money. How much have they lost? Well McKinsey says that from 2007 to 2012, the cumulative net loss of interest income for American households was $360bn, compared with a cumulative net loss of $160bn for eurozone citizens and $110bn (£70bn) for British people." Continue reading →

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‘Big Short’ Genius Thinks Another Financial Crisis Is Looming

"Well, we are right back at it: trying to stimulate growth through easy money. It hasn’t worked, but it’s the only tool the Fed’s got. Meanwhile, the Fed’s policies widen the wealth gap, which feeds political extremism, forcing gridlock in Washington. It seems the world is headed toward negative real interest rates on a global scale. This is toxic. Interest rates are used to price risk, and so in the current environment, the risk-pricing mechanism is broken. That is not healthy for an economy. We are building up terrific stresses in the system, and any fault lines there will certainly harm the outlook." Continue reading →

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Puerto Rico Defaults On Bonds: Return Does Not Come Without Risk

"Many American investors bought Puerto Rican bonds over the past five years as we all searched desperately for yield in the face of the Federal Reserve pushing interest rates down to historic lows. Normally, investors understand that higher yields come with greater risks. However, during the past six years of extraordinary interventions by the Fed into all sorts of financial markets, many investors may have decided that those higher yield investments weren’t really all that risky. Puerto Rico’s problems may serve as a much-needed wake up call to investors. As rates rise, capital will move back toward safety and the risk premium demanded of higher risk projects is likely to increase." Continue reading →

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John Hussman: Reversing the Speculative Effect of QE Overnight

"Last week, without taking any care to reduce the size of its balance sheet, the Federal Reserve instantly changed the monetary environment to one that is observationally equivalent to the one that prevailed in 2009. By raising interest rates artificially (through interest payments on reserves and reverse repurchases) and applying those payments to everything but currency in circulation, the Fed has neutralized the misguided speculative prop it created through 6 years of policy distortion, and it did so in one fell swoop. From the standpoint of investors, the overall effect is just as if the Fed had suddenly reversed every dollar of quantitative easing since 2009 ($1.7 trillion)." Continue reading →

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Ben Bernanke Was Incredibly, Uncannily Wrong [2009]

"We now have the diametrical opposite of the famous 'Peter Schiff Was Right' video (a compilation of 2006 and 2007 clips in which Schiff, a financial expert who subscribes to Austrian economics, predicted the deep recession that would follow the bursting of the housing bubble). The new, opposite video is a compilation of the 2005–2007 prognostications of Federal Reserve Chairman Ben Bernanke. In it, Bernanke is shown to have been just as embarrassingly wrong as Schiff was uncannily right. Could their differences in economic understanding have anything to do with this remarkable dichotomy?" Continue reading →

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Bill Bonner: The First Shot in the War on Cash?

"Cash in hand is different. It is physical. Paper. You can do what you want with it. And you don’t pay a negative interest rate. Which is why the feds want to ban cash… They say it will make it easier for them to stimulate the economy. As long as you can hold physical cash, you have an easy way to escape negative interest rates: You just take the money out of the bank and put it in your home safe. But if physical cash is illegal, you have no choice. You have to keep 'your money' on deposit at the bank… and take whatever negative rate the bank imposes on you. Of course, the idea that taking away your money will stimulate economic growth is ridiculous." Continue reading →

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Oligarchies Masquerading as Democracies

"The creation of the Federal Reserve System in 1913 was the re-establishment of the oligarchs' lender of last resort. That meant that the federal debt would become the foundation of the entire economy: debt purchased by the central bank to balloon the monetary base. To pay off the debt would create mass deflation and depression. The oligarchs now have immunity. Congress will not order an independent audit of the FED. The model is the Bank of England. It has been the chief insurance agency of the Anglo-American oligarchy ever since 1694. The 'Glorious Revolution' of 1688/89 was in fact the symbolic triumph of the oligarchs over the king." Continue reading →

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