money

A Desperate US Mint Testing New Metals to Make Coins Cheaper to Mint

"The Federal Reserve has so debased the value of the dollar that it is now very expensive for the U.S. Mint to buy buy and use copper, nickel and zinc in the coins it produces. Currently, a penny costs more than two cents and a nickel costs more than 11 cents to make and distribute. A 400-page report presented last week to Congress outlines nearly two years of trials conducted at the Mint in Philadelphia, where a variety of metal recipes were put through their paces in the massive facility's high-speed coin-making machinery. But the Mint couldn't find any good replacements. Evaluations of 29 different alloys concluded that none met the ideal list of attributes." Continue reading →

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Leszek Balcerowicz: The Anti-Bernanke

"As an economic crisis manager, Leszek Balcerowicz has few peers. When communism fell in Europe, he pioneered 'shock therapy' to slay hyperinflation and build a free market. In the late 1990s, he jammed a debt ceiling into his country's constitution, handcuffing future free spenders. When he was central-bank governor from 2001 to 2007, his hard-money policies avoided a credit boom and likely bust. Poland was the only country in the European Union to avoid recession in 2009 and has been the fastest-growing EU economy since." Continue reading →

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The HSBC Debacle – A Double Whammy Of Political Risk And Hypocrisy

"Where does all of this money in fines go? The booty goes to the Federal Reserve (which probably gives it back to these big foreign banks anyways through stealth bailouts), the Justice Department, and other federal agencies. I struggle to think of another country besides the US that could successfully impose such obscene fines for similar reasons – that is because there are no meaningful comparisons. It may be easier to see the political risk in this if it is put in another perspective. Imagine if China imposed a 13 billion yuan (~$2 billion) fine on JPMorgan for doing business that somehow involved Taiwan, a country Beijing considers a 'rogue state.'" Continue reading →

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JP Morgan Admits That “QE Will Offset Almost All Of Next Year’s Government Deficit”

"Since the Lehman crisis, the Fed has been purchasing Treasuries and Agencies at a $500bn per year pace. This flow, which is equivalent to around 3.5% of US GDP, has offset more than a third of the government deficit since the end of 2008. In other words, QE purchases meant that the QE-adjusted government deficit has averaged 5.8% of GDP since the end of 2008 instead of 9.3% for the actual government deficit. This week’s Fed announcement means that this QE flow will double from a $500bn pace currently to $1tr. Coupled with a projection of a lower government deficit next year, to around 6% of GDP, this means that QE will offset almost all of next year’s government deficit." Continue reading →

Continue ReadingJP Morgan Admits That “QE Will Offset Almost All Of Next Year’s Government Deficit”

Germans hoarding mountains of gold

"Like Scrooge McDuck or the dragon Smaug in J. R. R. Tolkien's The Hobbit, Germans are gathering vast quantities of gold - a study showed that the average German owns close to €6,000 worth of the shiny metal. Even though Europe's largest economy has weathered the world economic crisis relatively well, Germans have still been extra jittery about their savings, a study by the Steinbeis Research Center for Financial Services in Berlin revealed. Around 32 percent of the gold owned in Germany in the form of bars and coins was accumulated since the financial and economic crises began, the study concluded." Continue reading →

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An Afghan Mystery: Why Are Large Shipments of Gold Leaving the Country?

"Without knowledge of how much gold is leaving, it is impossible to calculate the value of the trade. But airport security forms that cover the last two weeks of October indicate about 560 pounds, worth about $14 million, were carried by hand out of Afghanistan during that period. That is a princely sum in one of the world’s 10 poorest countries. But it is perhaps a measure of the current state of affairs in Afghanistan that seemingly no one — not Afghan bank regulators, not American investigators of illicit financing, not European economic experts — found it particularly surprising that gold appears to have joined bank notes in the skies over Afghanistan." Continue reading →

Continue ReadingAn Afghan Mystery: Why Are Large Shipments of Gold Leaving the Country?

Detlev Schlichter: “Watching your money disappear” – Speech to senior representatives of the UK pension fund industry

"I believe disappearing money will be the major event of the present decade, and it will not just have major implications for your business, it will have grave consequences for society at large. The money itself may not in fact disappear (although some of it probably will) but money’s value will disappear, moneys purchasing power. This will not be the result of an act of magic but will simply be the consequence of our monetary arrangements and the established course of policy. Future historians will be surprised that anybody could have seriously contemplated a different and much happier outcome for today’s system of unconstrained fiat money production." Continue reading →

Continue ReadingDetlev Schlichter: “Watching your money disappear” – Speech to senior representatives of the UK pension fund industry

The Worst Inflation in My Lifetime

"Shortly after we took this family photo in 1951, Dad decided to buy a second home in Brazil, where we experienced the worst inflation of the 20th Century. One day, the president announced an appeal to patriotism — 'gold for Brazil.' All loyal citizens were asked to collect any gold they had in their home and donate it to the government. Later, when inflation surpassed an annual rate of 2,000 percent, the government got so desperate it didn’t bother making public appeals. It summarily announced that everyone’s bank accounts were frozen and everyone’s savings were confiscated." Continue reading →

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Bloomberg: Smart Money Is on Geithner to Replace Bernanke

"Geithner was president of the Federal Reserve Bank of New York from 2003 to 2009, the critical years leading up to and including the financial crisis. He has never worked on Wall Street. By design, the New York Fed has traditionally been the most powerful of the Federal Reserve banks, because of its proximity to the powerful Wall Street banks that it regulates. And Geithner played a major role, along with Bernanke and then Treasury Secretary Henry Paulson, in the bailouts of Bear Stearns Cos., Merrill Lynch, American International Group Inc. (AIG) and in the decision to allow Lehman Brothers Holdings Inc. to go bankrupt." Continue reading →

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Japan’s Shinzo Abe prepares to print money for the whole world

"Mr Abe’s Liberal Democratic Party (LDP) won a landslide victory on Sunday, securing a two-thirds 'super-majority' in the Diet with allies that can override senate vetoes. Mr Abe said he would 'set a policy accord' with the Bank of Japan for a mandatory inflation target of 2pc, backed by 'unlimited' monetary stimulus. 'It's very rare for monetary policy to be the focus of an election. We campaigned on the need to beat deflation, and our argument has won strong support. I hope the Bank of Japan accepts the results and takes an appropriate decision,' he said. He has already threatened to change the Bank of Japan’s governing law if it refuses to comply." Continue reading →

Continue ReadingJapan’s Shinzo Abe prepares to print money for the whole world