History Repeating

Falling Real Yields: A Buy Signal for Gold

"It’s not only Treasury yields that are falling; nominal interest rates are in free-fall around the world: German bunds yield just 1.4 percent and French government bond yields fell to 1.65 percent — the lowest level since 1746! Two of Europe’s most troubled PIIGS, Spain and Italy, also have witnessed record low bond yields of 2.6 percent and 2.76 percent, respectively. Yield spreads on emerging market Tdebt and junk bonds compared with Treasuries are likewise sinking toward new lows. his compression in nominal yields around the global has important implications for investors and could prove very bullish for certain asset classes. Case in point: Gold." Continue reading →

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Japan to keep printing money for years to come, so learn to enjoy it

"The authorities are about to funnel large sums into Japanese stocks openly and deliberately under the next phase of Abenomics, both by regulatory fiat and by purchasing the Nikkei index directly with printed money. Prime minister Shinzo Abe is unshackling the world's biggest stash of savings, the $1.3 trillion Government Pension Investment Fund (GPIF). Officials say the ceiling on equity holdings will rise from 12pc to around 20pc as soon as August, opening the way for a $100bn buying blitz. Mr Abe's move comes sooner than expected and amounts to a market shock, though nobody should be shocked anymore as he keeps doubling down on the world's most radical economic experiment." Continue reading →

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Bill Bonner: This Should Make Every American Angry…

"When the price of money goes down banks’ profit margins go up; by moving to zero interest rates, the Fed handed them higher earnings. And by guaranteeing the debt of the weakest institutions, the Fed gave big bonuses to the worst managers. Now, the alcohol is taking effect. All around the world markets stagger. Economies slur their words. Investors have severe memory loss. Businessmen can’t tell up from down. And the poor consumer gets a headache every time he checks his bank balance. Some people have access to the free money. Others don’t. Those with the access tend to be in the financial elite. It is no wonder the rich get richer; the game is rigged." Continue reading →

Continue ReadingBill Bonner: This Should Make Every American Angry…

Economy Tanks … and Stocks Soar?

"Negative 1 percent. That’s how much the U.S. economy managed to 'grow' in the first quarter, according to the government’s revised estimate. After more than $800 billion in stimulus spending from Washington. After more than $3 trillion of QE from the Federal Reserve. After six-plus years of record-low interest rates … record levels of monetary intervention in the U.K., Japan and Europe … and the biggest bailouts in the history of the world. It’s much worse than the 0.1 percent gain the Commerce Department originally reported. It was twice as bad as the 0.5 percent decline economists were expecting. And it’s the worst reading since the first quarter of 2011." Continue reading →

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Bill Bonner: Why I Sued Washington 28 Years Ago

"When the Spanish conquered South America, their encomienda system of slavery typically required only 40 days of work from their victims. The French conquered Madagascar; they forced male Hovas between 16 and 60 to work 50 days a year. The US example is closer to that of Russia – where Emperor Paul I, in 1797, declared that three days a week was enough for serfs to give their lords and masters. That works out to nearly 150 days a year. A 50% tax rate – federal, state and local – is the equivalent of about 125 days of forced labor a year. Pretty steep. But that’s just the beginning. In our system of crony democracy, all the major industries have whips in their hands." Continue reading →

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Lessons from the Great Austrian Inflation

"One of these tragic episodes that is worth recalling and learning from was the disintegration of the Austro-Hungarian Empire and the accompanying Great Austrian Inflation in the immediate postwar period in the early 1920s. For those who say that such things as a hyperinflation, economic chaos, capital consumption and political tyranny 'can't happen here,' it is worth remembering that a hundred years ago, in 1914, few in prewar Vienna could have imagined that it would happen there." Continue reading →

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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 →

Continue ReadingHawks Take Flight: Why the Fed’s Hypocritical Dialectic Continues

The Successor to Keynes

"The words, 'Brilliant!' 'Ground-breaking!' and 'Visionary!' He recommends: Uniform global taxation; Confiscatory tax on inherited wealth; 15% tax on capital; 80% tax on annual incomes over US$500,000; Enforced transparency on all bank transactions; Overt use of inflation to redistribute wealth downwards. Why didn’t anyone else think o"The words, 'Brilliant!' 'Ground-breaking!' and 'Visionary!' will no doubt be seen in many reviews of Mr. Piketty’s book. He recommends: Uniform global taxation; Confiscatory tax on inherited wealth; 15% tax on capital; 80% tax on annual incomes over US$500,000; Enforced transparency on all bank transactions; Overt use of inflation to redistribute wealth downwards. Why didn’t anyone else think of this brilliant plan? Well actually, they did. In fact, the above is essentially the shopping list of the IMF, the EU, the OECD and, in fact, many of the governments that make up what was formerly described as 'the free world.'" this brilliant plan? Well actually, they did. In fact, the above is essentially the shopping list of the IMF, the EU, the OECD and, in fact, many of the governments that make up what was formerly described as 'the free world.'" Continue reading →

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Bank of Israel’s Fischer, Treasury’s Brainard to push for more activist Fed

"The arrival of former Bank of Israel Governor Stanley Fischer and former U.S. Treasury official Lael Brainard will add two strong voices to back Chair Janet Yellen's view that loose monetary policy needs to be extended to turn around a slack labor market. Fischer intervened directly in Israel's mortgage market to tackle a real estate bubble, while Brainard pushed EU governments hard for more aggressive action from the European Central Bank during the euro zone crisis. Interviews with former colleagues and a review of their public statements also suggest both will want the Fed to remain in activist mode long after its current programs wind down and its bloated balance sheet shrinks." Continue reading →

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Yellen Concerned Fed Models Fail to Predict Price Moves

"Federal Reserve Chair Janet Yellen is concerned that the standard models central banks use to forecast inflation may be broken. Behind her disquiet: the failure of the models to foresee the path of prices in the U.S. during the last recession and its aftermath and in Japan during its deflationary period from 1998 to 2012. U.S. inflation has been higher than the simulations suggested, while Japanese price declines proved more persistent. Yellen alluded to her concerns in a speech last week, saying the Fed has to 'watch carefully' to see if inflation picks up as the central bank projects -- and hopes -- during the next few years." Continue reading →

Continue ReadingYellen Concerned Fed Models Fail to Predict Price Moves