I don't know how people know, but they do know what's going on, in a general way. I think authors and producers of "fiction" like Harry's Law understand the public mind from the inside better than any opinion polls can describe it from the outside.
The "okeydoke" just don't fly no more ... or if it does get run up the flag pole a thousand times per day on corporate media, nobody salutes. It's amazing to see a convergence of views from all demographics on the same understanding of how sadly broken the system is.
For all that is good and bad in this policy of monetization of debt and GDP, the past-masters remain, Argentina. Argentina has monetized debt, expanded the GDP and created 20% inflation. Australia and China did big stimulus and had no recession. Argentina did big money expansion as Argentina always does.
Like all things ecomomic, monetizing debt has a price, for U.S., Argentina and now Europe. Other extreme is Switzerland. Swiss have a long term economic debate re Finanz Kapital oder Arbeit Kapital? Money or Work?
U.S. has expanded its M1 mightly in the last 2 years. This stuff is Chicago School B.S which is not empirical. It is modern witchcraft.
A Zerohedge article goes into how swaps protect banks and explains how using swaps are a bail out. There is all sorts of derivatives out there and exposure to European debt.
So, let's say people believe Germany is pulling out of the Euro and going to use their own currency. So, that means Euros won't be worth as much, they would be devalued. But by Central banks stepping in and swapping currencies very cheaply, that means the Euro has more value because it's cheaper to swap it for U.S. dollars and it can help prop up the Euro to it's original exchange rate before Germany pulled out.
It's a way to keep the Euro for devaluating. If it takes more Euros to get a dollar then the value of the Euro went down. Sovereign debt is in Euros, and no surprise they interest to sell the bonds dropped today.
It's kind of like they made a "back up" currency to the Euro in dollars,Yen, Swiss Francs.
Robert, can you please explain in laymen's terms how this is a way to bail out the Euro. It is not at all clear to me from your excerpts how this works, nor is it clear how "this is, in essence, more kicking the can down the road and money printing." How is this "money printing"? I guess I can see that in the reduced China reserve requirements, since that will lead to the creation of more Chinese money. Is there money printing going on in US$?
I appreciate any efforts in helping me understand this and thanks for your informative blog.
I'm thinking that you're watching for signs of (yet another) MBS bail-out, per remarks this quarter from some of the FOMC. Your recent report reviewing ADP employment report (part about "Construction just came alive") would tend to make another MBS bail-out less defensible ... one would think.
Of course, if some Fed move would be something other than just more transfer of wealth to the big dogs ... it could even be a good thing, IMO. (But that's unlikely.)
Several Fed officials have made clear they are open to launching a new round of bond buying, known as quantitative easing, to bring down long-term U.S. interest rates. But they have reservations about whether such a program would be effective.
"In the middle of the night, the Federal Reserve moved to make it cheaper to swap Euros for dollars, in a coordinated move with Switzerland, Canada, England, the European Central Bank and Japan." -- Robert Oak
Jesse identifies the six central banks as "Anglo-American" but I would suggest that a better descriptor would be "tri-lateral," since they include the Bank of Japan, the European Central Bank (ECB) and the Swiss National Bank. (See, Wall Street Journal online story, Central Banks Take Coordinated Action.)
In his blog, Jesse suggests that a key component of a plan or trend to disguise monetization of USA national debt is a tendency to alter GDP toward "Nominal GDP" or "NGDP", NGDP being GDP without adjustment for inflation.
Since what is said to be of most importance is the ratio of debt to GDP, a key to what is happening is that the ratio of debt to GDP becomes less if NGDP is used rather than GDP. This effect can result simply from year-over-year officially understating the rate of inflation -- GDP will appear larger than it really is, and unsustainable trends toward hyperinflation will be hidden. Thus, using NGDP rather than real GDP means a GDP growth target can be achieved simply by inflating the money supply to make up the difference between real growth and officially designated "headline growth."
However, Jesse believes that the Fed isn't relying solely on NGDP chicanery to disguise underlying problems, rather "major monetization is already occurring in the Eurodollar markets, and an ongoing stealth bailout of European debt, in order to save the big money center banks at home and broaden the reach of the Dollar." Looking back and then projecting forward, Jesse believes that "the Fed stopped reporting on Eurodollars some years ago, as a component of M3" in order "to pave the way for the monetary equivalent of a financial neo-con, to addict European governance to the US dollar and pave the way for a stronger position for the dollar as a one world currency."
This begins to sound like what I sometimes call 'goldbuggery', meaning CT built around interpretation of financial history as all about an ineluctable trend toward collapse of all global currencies (except gold) -- and the big take-over of the world by certain financial elites. As a monetarist, I agree to some extent with what I call goldbuggery, except that (again as a monetarist) I believe that the trend toward collapse can be reversed as it has more to do with public ignorance/apathy, political corruption and the central bank system of fractional reserve banking than with the operation of any universal or unavoidable laws of political economics (theories of the Austrian or von Mises School).
Jesse probably takes a view similar to mine. In any case, Jesse's Café Américain is one of the most sane and balanced open blogs in the world of PM-based economic commentary.
Jesse stops short of CT, saying, "Most of what is transpiring now has not been planned." But Jesse retains the basic skepticism and suspicion about a trend (if not necessarily a conspiracy) toward a global fiat currency --
Money is power, and the ability to control the distribution and value of money and wealth is power in its most refined and effective form. One only needs relatively small armies to retain the power to control the money in order to subordinate vast resources and peoples if you can control their definition of wealth and the distribution of money, and all that follows from it.
If you are able to create money at will, and give it to your friends and allies with even relative discretion, you are able to confiscate, without visible effort, the labor and wealth of every person who holds that currency, wherever they are and however they seek to protect it. It is the end of sovereignty and the right to private ownership of all goods and property that are valued by that currency. And it is a power too great to be held inviolate by any small group of men with the ability to act in secrecy.
I believe that the original purpose of this effort to shape the world economy was well-intentioned, or at least was represented as such to many participants as the logical solution to the devastating wars that repeatedly bloodied the last century.
Most of what is transpiring now has not been planned, but events make the moment, and moment gives rise to the man. And history shows us that too much power in too few hands never fails to end in exploitation. With the rise of a single world super-power, no matter how good it might have been at its heart, the tide of corruption rose with it. This is why central planning invariably fails.
I put Jesse's "too much power in too few hands never fails to end in exploitation" in bold, because that's where I am assured that Jesse's approach is much like my own. I am of the original 'Chicago school' as represented by Henry C. Simons. For Simons, the basic criterion for economic policy is whether it promotes individual liberty, or not -- and individual liberty is incompatible with concentration of too much power in too few hands. The Austrian school, by contrast, asserts that the basic criterion is whether economic policy promotes accumulation and concentration of capital in the hands of a few. The Austrian school promotes the idea that by promoting a system that favors capital growth and concentration, individual liberty will somehow be automatically protected and enhanced. The (original) Chicago school, by contrast, promotes the idea that by promoting a system that fosters individual liberty, the greatest material progress is fostered, protected and enhanced.
In any event, I find Jesse's analysis fairly convincing, although I wouldn't call it 100% scientific.
I think Jesse does a good job of presenting an aspect of our postmodern world system of global capital that is real and pertinent, without getting carried away into CT or losing sight of the fundamental importance of individual liberty.
I'm still waiting for details to see if that little line in the H.4.1 report is for this purpose. I believe so, which makes us that read numbers, aware.
Of course the people suffer and Europe exploded today in demonstrations, some already planned.
As the Aussies say, "Stack me!" It sure didn't take long. I thought we might be hanging in 'Ground Hog Day' suspended animation for a week, but the engines of globalism have already pushed the world forward out of the muck of Euro mud ..... and into what?
Maybe into more Euro mud muck ... or maybe into the fabled New American Century, where the USD rules unchallenged once again?
Anyway, there was something a little different in the news today -- different enough that we seem to have plowed our way out of yesterday's 'Ground Hog Day' rut. But -- back in the world of plain old real economics -- we're still laboring in the same muddy fields as yesterday
I worked in government finance for awhile. I went into the field brimming with optimistic naivete (this was my first job, after all), but quickly learned that "underwriting" at a certain level means being bullied by high-ranking elected officials into either presenting unethical/financially treacherous "pet" deals or losing your job. I wish more people understood how common this experience is throughout all tiers of government - and that it gets worse the higher up you go, because what's a billion bucks to the Federal government?
They believe a few things, #1 that the 17 Eurozone countries are going to issue some sort of "preferred" Euro bond to cover the debt and more integration, and they are "working on a solution".
but as far as I know little has changed beyond what I put up earlier, strong signs of the "end of the Euro".
7.56% on 10- year paper. Despite the record yields, the auction attracted enough demand -- driven mainly by domestic buyers, analysts said -- to cover the amount on offer.
The authors' analysis assumes that capital gains tax rates for low income investors are always lower than for high income investors. Nonetheless, the authors conclude that capital gains tax favors high income investors, based on analysis of differential value of investors' option to realize losses at the higher marginal ordinary tax rate while realizing gains at the lower tax rate for (longterm) capital gains.
Right now things are "all good" but I expect this to change. The latest is the emergency "bail out" fund isn't adequate and Greek got a $8 billion payment. This is all no surprise and now buzzes about the IMF are popping up (read U.S. bails out Europe)....
Seems the only way to find out what's really happening, as Europe loves to issue "solutions" that are really kicking the can down the road, is to check sovereign bond prices.
I'll update something, probably on whatever the next major event is. They have officially about 10 days (by most analysts), so we'll just keep tracking and updating.
What I'm surprised about is apathy of Americans in tracking on Europe. It's seriously going to tank the global economy. I don't think that's realized.
Being that the Fed was created by some of the
lowest of the low back in 1913 (Aldrich & friends)
and is not accountable to anyone and the fruit
of their operation is 100 years of the steady
demise of our dollars value. Is it any wonder
that we the gullible deserve anything less than
total ruin when we willingly tolerate such
thievery for so long? My research into the history
of the Fed is making me ill. Please join me.
I don't know how people know, but they do know what's going on, in a general way. I think authors and producers of "fiction" like Harry's Law understand the public mind from the inside better than any opinion polls can describe it from the outside.
The "okeydoke" just don't fly no more ... or if it does get run up the flag pole a thousand times per day on corporate media, nobody salutes. It's amazing to see a convergence of views from all demographics on the same understanding of how sadly broken the system is.
For all that is good and bad in this policy of monetization of debt and GDP, the past-masters remain, Argentina. Argentina has monetized debt, expanded the GDP and created 20% inflation. Australia and China did big stimulus and had no recession. Argentina did big money expansion as Argentina always does.
Like all things ecomomic, monetizing debt has a price, for U.S., Argentina and now Europe. Other extreme is Switzerland. Swiss have a long term economic debate re Finanz Kapital oder Arbeit Kapital? Money or Work?
U.S. has expanded its M1 mightly in the last 2 years. This stuff is Chicago School B.S which is not empirical. It is modern witchcraft.
http://www.federalreserve.gov/releases/h6/current/
A Zerohedge article goes into how swaps protect banks and explains how using swaps are a bail out. There is all sorts of derivatives out there and exposure to European debt.
So, let's say people believe Germany is pulling out of the Euro and going to use their own currency. So, that means Euros won't be worth as much, they would be devalued. But by Central banks stepping in and swapping currencies very cheaply, that means the Euro has more value because it's cheaper to swap it for U.S. dollars and it can help prop up the Euro to it's original exchange rate before Germany pulled out.
It's a way to keep the Euro for devaluating. If it takes more Euros to get a dollar then the value of the Euro went down. Sovereign debt is in Euros, and no surprise they interest to sell the bonds dropped today.
It's kind of like they made a "back up" currency to the Euro in dollars,Yen, Swiss Francs.
Robert, can you please explain in laymen's terms how this is a way to bail out the Euro. It is not at all clear to me from your excerpts how this works, nor is it clear how "this is, in essence, more kicking the can down the road and money printing." How is this "money printing"? I guess I can see that in the reduced China reserve requirements, since that will lead to the creation of more Chinese money. Is there money printing going on in US$?
I appreciate any efforts in helping me understand this and thanks for your informative blog.
nominal GDP to debt ratio has to be used, else you are adjusting for inflation on debt and that doesn't work out.
Yes, currency devaluation is a way to "reduce" the debt and sure this is one major possibility.
I also see this as a way to bail out the Euro if they kick out countries or revert back to old currencies.
I'm thinking that you're watching for signs of (yet another) MBS bail-out, per remarks this quarter from some of the FOMC. Your recent report reviewing ADP employment report (part about "Construction just came alive") would tend to make another MBS bail-out less defensible ... one would think.
Of course, if some Fed move would be something other than just more transfer of wealth to the big dogs ... it could even be a good thing, IMO. (But that's unlikely.)
From WSJ online story, noon today (Wednesday), Central Banks Take Coordinated Action --
"In the middle of the night, the Federal Reserve moved to make it cheaper to swap Euros for dollars, in a coordinated move with Switzerland, Canada, England, the European Central Bank and Japan." -- Robert Oak
I first heard the news last night from a blog at blogspot Jesse's Café Américain: Currency Wars: The Anglo-American Century and Why the Financial Engineers Hate Gold and Silver (29 November 2011, Paris time). Then about noon today (30 November), the WSJ online story made it official, "the market" said 'Huzzah!' and now happy times are here again as the bell at the NYSE has sounded at the end of a great day for traders and brokers.
Jesse identifies the six central banks as "Anglo-American" but I would suggest that a better descriptor would be "tri-lateral," since they include the Bank of Japan, the European Central Bank (ECB) and the Swiss National Bank. (See, Wall Street Journal online story, Central Banks Take Coordinated Action.)
In his blog, Jesse suggests that a key component of a plan or trend to disguise monetization of USA national debt is a tendency to alter GDP toward "Nominal GDP" or "NGDP", NGDP being GDP without adjustment for inflation.
Since what is said to be of most importance is the ratio of debt to GDP, a key to what is happening is that the ratio of debt to GDP becomes less if NGDP is used rather than GDP. This effect can result simply from year-over-year officially understating the rate of inflation -- GDP will appear larger than it really is, and unsustainable trends toward hyperinflation will be hidden. Thus, using NGDP rather than real GDP means a GDP growth target can be achieved simply by inflating the money supply to make up the difference between real growth and officially designated "headline growth."
However, Jesse believes that the Fed isn't relying solely on NGDP chicanery to disguise underlying problems, rather "major monetization is already occurring in the Eurodollar markets, and an ongoing stealth bailout of European debt, in order to save the big money center banks at home and broaden the reach of the Dollar." Looking back and then projecting forward, Jesse believes that "the Fed stopped reporting on Eurodollars some years ago, as a component of M3" in order "to pave the way for the monetary equivalent of a financial neo-con, to addict European governance to the US dollar and pave the way for a stronger position for the dollar as a one world currency."
This begins to sound like what I sometimes call 'goldbuggery', meaning CT built around interpretation of financial history as all about an ineluctable trend toward collapse of all global currencies (except gold) -- and the big take-over of the world by certain financial elites. As a monetarist, I agree to some extent with what I call goldbuggery, except that (again as a monetarist) I believe that the trend toward collapse can be reversed as it has more to do with public ignorance/apathy, political corruption and the central bank system of fractional reserve banking than with the operation of any universal or unavoidable laws of political economics (theories of the Austrian or von Mises School).
Jesse probably takes a view similar to mine. In any case, Jesse's Café Américain is one of the most sane and balanced open blogs in the world of PM-based economic commentary.
Jesse stops short of CT, saying, "Most of what is transpiring now has not been planned." But Jesse retains the basic skepticism and suspicion about a trend (if not necessarily a conspiracy) toward a global fiat currency --
I put Jesse's "too much power in too few hands never fails to end in exploitation" in bold, because that's where I am assured that Jesse's approach is much like my own. I am of the original 'Chicago school' as represented by Henry C. Simons. For Simons, the basic criterion for economic policy is whether it promotes individual liberty, or not -- and individual liberty is incompatible with concentration of too much power in too few hands. The Austrian school, by contrast, asserts that the basic criterion is whether economic policy promotes accumulation and concentration of capital in the hands of a few. The Austrian school promotes the idea that by promoting a system that favors capital growth and concentration, individual liberty will somehow be automatically protected and enhanced. The (original) Chicago school, by contrast, promotes the idea that by promoting a system that fosters individual liberty, the greatest material progress is fostered, protected and enhanced.
In any event, I find Jesse's analysis fairly convincing, although I wouldn't call it 100% scientific.
I think Jesse does a good job of presenting an aspect of our postmodern world system of global capital that is real and pertinent, without getting carried away into CT or losing sight of the fundamental importance of individual liberty.
I'm still waiting for details to see if that little line in the H.4.1 report is for this purpose. I believe so, which makes us that read numbers, aware.
Of course the people suffer and Europe exploded today in demonstrations, some already planned.
As the Aussies say, "Stack me!" It sure didn't take long. I thought we might be hanging in 'Ground Hog Day' suspended animation for a week, but the engines of globalism have already pushed the world forward out of the muck of Euro mud ..... and into what?
Maybe into more Euro mud muck ... or maybe into the fabled New American Century, where the USD rules unchallenged once again?
Anyway, there was something a little different in the news today -- different enough that we seem to have plowed our way out of yesterday's 'Ground Hog Day' rut. But -- back in the world of plain old real economics -- we're still laboring in the same muddy fields as yesterday
See, Robert Oak's blog on latest world-saving move by the traditional tri-lateral leaders of global capital, Central Banks Make Swappin' Out Your Euro Cheaper.
I worked in government finance for awhile. I went into the field brimming with optimistic naivete (this was my first job, after all), but quickly learned that "underwriting" at a certain level means being bullied by high-ranking elected officials into either presenting unethical/financially treacherous "pet" deals or losing your job. I wish more people understood how common this experience is throughout all tiers of government - and that it gets worse the higher up you go, because what's a billion bucks to the Federal government?
day of sentencing and it's not clear if it's a homicide, suicide. She was the whistleblower for the above indictments.
Naked Capitalism has more.
They believe a few things, #1 that the 17 Eurozone countries are going to issue some sort of "preferred" Euro bond to cover the debt and more integration, and they are "working on a solution".
but as far as I know little has changed beyond what I put up earlier, strong signs of the "end of the Euro".
NYSE treading water today.
Euro up a little over yesterday.
Gold up, but only slightly (with silver actually down a tad).
U.S. 10-year continuing high (effective interest down), but mixed during the day.
Crude oil is still under $100, but perilously close at $99.30 (WTI).
Merkel still says 'Niemal!' to the euro bond deal.
NASDAQ reports Dow Jones online reports "Italian Bonds Sell, But At Record Yields"
Something seems to be stabilizing ... but what?
See, article by Stephen Zarlenga at www.monetary.org --
Is the Federal Reserve System a Governmental or a Privately controlled organization?
Referring to the SSRN research (PDF) --
The authors' analysis assumes that capital gains tax rates for low income investors are always lower than for high income investors. Nonetheless, the authors conclude that capital gains tax favors high income investors, based on analysis of differential value of investors' option to realize losses at the higher marginal ordinary tax rate while realizing gains at the lower tax rate for (longterm) capital gains.
PDF download currently available at webpage --
papers.ssrn.com/sol3/papers.cfm?abstract_id=1962118
(Thanks to R.O. for positive criticism.)
Right now things are "all good" but I expect this to change. The latest is the emergency "bail out" fund isn't adequate and Greek got a $8 billion payment. This is all no surprise and now buzzes about the IMF are popping up (read U.S. bails out Europe)....
Seems the only way to find out what's really happening, as Europe loves to issue "solutions" that are really kicking the can down the road, is to check sovereign bond prices.
Bloomberg has good charts.
I'll update something, probably on whatever the next major event is. They have officially about 10 days (by most analysts), so we'll just keep tracking and updating.
What I'm surprised about is apathy of Americans in tracking on Europe. It's seriously going to tank the global economy. I don't think that's realized.
Due to the 60 Minutes publicity, that family got a job, place to live, but there are hundreds of thousands just like them.
Being that the Fed was created by some of the
lowest of the low back in 1913 (Aldrich & friends)
and is not accountable to anyone and the fruit
of their operation is 100 years of the steady
demise of our dollars value. Is it any wonder
that we the gullible deserve anything less than
total ruin when we willingly tolerate such
thievery for so long? My research into the history
of the Fed is making me ill. Please join me.
Sum up the main conclusion and for your comment subject line, put a descriptive title.
i.e. new research proves capital gains tax bias against middle class.
Your comments look like referrer spam links, which as admin I'm immediate moving to delete until I realize it's you.
Pages