Money For Nothing

Cheap Printing vs. Expensive Drilling

"Yellen explained that the Fed helps people secure employment 'by influencing interest rates.' She followed, 'Although we work through financial markets, our goal is to help Main Street, not Wall Street.' Her predecessor used the same rhetoric in 2012. 'This is a Main Street policy. Many people own stocks directly or indirectly. The issue here is whether or not improving asset prices generally will make people more willing to spend.' Oil, unlike the Fed’s fiat dollars, can’t be created out of nothing. And, job or no job, people are driving. Mrs. Yellen tells crowds, Don’t worry be happy, your job will be printed anytime now. Let’s just say, for those with a job to go to, getting there will not be getting easier." Continue reading →

Continue ReadingCheap Printing vs. Expensive Drilling

Argentina inches toward economic crisis, again

"Inflation is accelerating and projected to hit 40% in 2014, according to Sergio Berensztein, director of Poliarquía Consultores. Unofficial estimates put the inflation rate at above 25% in 2013, much higher than the official government rate of 10.9% — a figure few believe, Berensztein says. A study from consultancy Estudio Bein estimates inflation has eroded wages nearly 10% over the past four months. The Argentine peso was devalued nearly 20% in January, further diminishing purchasing power and making imported items more expensive. Moody's downgraded Argentina's sovereign rating March 17 to Caa1, seven levels below investment grade status, Bloomberg reported." Continue reading →

Continue ReadingArgentina inches toward economic crisis, again

Yellen Surprise Suggests Investors Should Go On Defense

"Comments this week from Janet Yellen, who just took over as Fed chair, caught many in the market off guard when she suggested the central bank may be in a position to raise its key interest rate as soon as six months after ending its massive bond-buying stimulus. That could put the first rate hike on the table by the spring of 2015 compared with previous expectations for no sooner than the second half of the year. Indeed, rate futures markets now assign a 52 percent probability to the Fed's April 2015 meeting for the first rate hike versus just a 33 percent chance a month ago. Stocks such as utilities could be an option to steer clear of some of the hotter stocks and sectors of 2013 that are now richly valued." Continue reading →

Continue ReadingYellen Surprise Suggests Investors Should Go On Defense

Fund Manager Jeremy Grantham Blasts the Fed

"The Fed can manipulate stock prices. That's perhaps the only thing they can do. But why would you want to get an advantage from the wealth effect when you know you are going to have to give it all back when the Fed reverses course. At the same time, the Fed encourages steady increasing leverage and more asset bubbles. It's clear to most investing professionals that they can benefit from an asymmetric bet here. The Fed gives them very cheap leverage on the upside, and then bails them out on the downside. And you should have more confidence of that now. The only ones who have really benefited from QE are hedge fund managers." Continue reading →

Continue ReadingFund Manager Jeremy Grantham Blasts the Fed

UK financial official: Monetize state debt when deflation risks persist

"There is no need for central banks’ balance sheets to shrink. They could stay permanently larger; and, for some countries, permanently bigger central-bank balance sheets will help reduce public-debt burdens. Even when permanent monetization occurs — as it almost certainly will in Japan and possibly elsewhere — it may remain forever the policy that dare not speak its name. Such reticence may serve a useful purpose. But it must not blind central banks and governments to the full range of policy tools available to address today’s severe debt overhangs." Continue reading →

Continue ReadingUK financial official: Monetize state debt when deflation risks persist

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?

Bill Bonner: The Massive Problem Threatening the Global Recovery

"Debt is an obligation laid upon the future by the past. The larger it gets, the harder it is for the future to happen. There is a correlation between extreme levels of public debt and low economic growth. High levels of debt-to-GDP have been historically associated with low levels of economic growth. That is what has been happening in Japan for the last 23 years… and in Europe and the US for the last seven. These economies are still fighting deleveraging, resisting debt deflation and pretending that they can continue to add debt forever… and that somehow this will get them out of their debt traps. But they are doomed. Without growth they can’t pay the debt. With so much debt, they can’t grow." Continue reading →

Continue ReadingBill Bonner: The Massive Problem Threatening the Global Recovery

Global Debt Exceeds $100 Trillion as Governments Binge, BIS Says

"The amount of debt globally has soared more than 40 percent to $100 trillion since the first signs of the financial crisis as governments borrowed to pull their economies out of recession and companies took advantage of record low interest rates, according to the Bank for International Settlements. The $30 trillion increase from $70 trillion between mid-2007 and mid-2013 compares with a $3.86 trillion decline in the value of equities to $53.8 trillion in the same period. Borrowing has soared as central banks suppress benchmark interest rates to spur growth. Yields on all types of bonds average about 2 percent, down from more than 4.8 percent in 2007." Continue reading →

Continue ReadingGlobal Debt Exceeds $100 Trillion as Governments Binge, BIS Says

Bill Bonner: The Coming Bull Market in Gold Stocks Is Going to Be BIG

"Most empires were financed on the loot captured from their conquered opponents. But the US Empire depends not on generals, but on bankers. Bernanke – the 'Hero of ’08' – kept the credit flowing at a crucial moment… He kept the empire on schedule… and on target… for its rendezvous with disaster. [..] Debt has its lifecycle. So do empires. Both expand. Then both… without exception… contract. An empire funded by debt is an especially ungainly, grotesque thing. It lurches from one disaster to another – going deeper and deeper into debt each time. But it is not the debt that kills empires. Debt is just a razor conveniently left on the side of the tub." Continue reading →

Continue ReadingBill Bonner: The Coming Bull Market in Gold Stocks Is Going to Be BIG