sound money

Robbing Peter

"Spain may defend its decision by pointing out that it has one of the lowest tax takes in the European Union, which is true. However, what should be the issue here is not the amount of tax being imposed, but the principle upon which the tax is being taken. Let there be no doubt about this bail-in or any other—it is pure theft. The measure in Spain is also an advance on the concept that, as long as an emergency is perceived to exist, confiscation is justified. In Spain, no emergency situation is being pretended; they simply want the money and have decided to take it." Continue reading →

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Spain Issues Retroactive 0.03% Tax on Bank Deposits

"Spain will retroactively tax bank deposits to January 1, 2014 stating the move will boost growth and job creation. Guru Huky correctly labeled the tax for what it is 'More than a tax, this looks like a mini seizure of deposits. Someone likely needs a few million and to balance the books.' The notion that a tax increase will boost the economy is of course absurd. But don't worry, it's only 0.03%, nudge nudge, wink wink ... for now." Continue reading →

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What’s It Like to Work for the New York FED?

"Not bad, if you like perks, 8-hour days, and bureaucratic security. This is the opinion of two-thirds of its employees who responded to the GlassDoor inquiry. It’s fat city in Fat City. And why not? Working for the Federal Reserve is a license to print money . . . literally. Click the link to see what the good life is like for America’s legal counterfeiting operation." Continue reading →

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Bursting Switzerland’s bubble

"Last year, SNP chief Thomas Jordan requested a [buffer] to be introduced for Swiss banks, forcing them to hold an additional one percent of risk-weighted assets to stave off the potential dangers of the housing boom. Earlier this year, as worries about a bubble increased, the SNB instigated a number of policies to prevent any more dramatic rises. This included doubling the capital buffer requirement to two percent. However, despite a partial slowdown since January, Jordan told reporters in March that the work was not yet done. 'The pace has slowed, but we are far away from the soft landing we want. We don’t yet see the slowdown that we would like to see.'" Continue reading →

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Sweden’s deflated economy: Sub-zero conditions

"Sweden’s economy, which it oversees, grew three times faster than the euro zone’s in 2010 and dodged Europe’s double-dip recession in 2012-13. The Riksbank felt confident enough in recovery to start raising interest rates in 2010. The Riksbank worried that rising household borrowing and soaring house prices could lead to trouble down the road. It therefore opted to 'lean against the wind', in central bankers’ parlance, and deflate the credit boom before it burst catastrophically. It seems instead to have taken the air out of everything but exuberant markets. Unemployment in Sweden has held steady, while Swedish private-sector debt as a share of GDP is higher now than it was in 2010." Continue reading →

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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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The Fed’s Dreaded Dilemma: A Weak Economy Plus Inflation

"The fact that the Fed’s PCE index is showing inflationary pressure is significant, since it is essentially designed to lowball price increases. The CPI gives a 31 percent weighting to shelter costs and a 17 percent weighting to transportation (read as rent and gasoline), which the PCE basically cuts in half. By reducing the volatility of its preferred inflation gauge, the Fed essentially gives itself the leeway to maintain a looser policy longer. But the fact that the PCE is on the rise leaves the Fed in a conundrum, having said for years now that it would act when inflation reaches an annualized 2 percent, a level that is fast approaching." Continue reading →

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Fed Still on Red Alert

"It’s bad enough that central bankers create money out of nowhere to buy bonds. Now it turns out that’s not all they’re buying. A study by global research firm Official Monetary and Financial Institutions Forum (OMFIF) states global public investors 'as a whole appear to have built up their investments in publicly quoted equities by at least $1 [trillion] in recent years.' The percentage of financial advisors who are bullish on the stock market jumped to 62.2%, the fifth straight week this indicator has been above the key 55% level. Other noteworthy tops came in August 1987 (60.8%), October 2007 (62%), and December 2004 (62.9%)." Continue reading →

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Bill Bonner: The Greatest Fraud Ever

"Banks – with the happy connivance of the Fed – create new money. Corporations use it to buy their own shares. Central banks buy shares too. Besides, buying stocks seems to please everyone who matters. Investors are happy. Speculators are happy. Economists are happy. Politicians are happy, too. After all, a rising stock market means the economy is getting better, doesn’t it? But there is a heavy price to pay, dear reader. The financiers end up owning more of the real businesses… the real enterprises… the real houses… the real output of the real economy. Wall Street firms own more houses. And more stocks. All are bought with money that they – or their cronies – created." Continue reading →

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U.S. Economy Shrank in First Quarter by Most in Five Years

"The U.S. economy contracted in the first quarter by the most since the depths of the last recession as consumer spending cooled. Gross domestic product fell at a 2.9 percent annualized rate, more than forecast and the worst reading since the same three months in 2009, after a previously reported 1 percent drop. It marked the biggest downward revision from the agency’s second GDP estimate since records began in 1976. Business investment fell at a 1.2 percent annualized rate, compared with a previously reported 1.6 percent annualized drop. Companies reduced their spending on structures at a 7.7 percent pace, and spending for equipment fell 2.8 percent, today’s report showed." Continue reading →

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