Since 2016, the US Monetary Base has declined by about 23.68%. This is the deepest and longest decline since the Federal Reserve was formed. This should not be ignored.
The last time there was a decline close to this magnitude, there was a sharp deflationary recession. That was the one that occurred from 1920 to 1921.
Below, is a long-term chart of the Monetary base that goes back to 1918.. Full Story
I’m not sure why Trump continues incessantly to harangue the Fed about cutting the Fed Funds rate. The Fed is printing money and sending it to the stock market via the banks. It’s a much more effective policy tool to accomplish Trump’s number one policy agenda, which is to drive the stock market inexorably higher.
I put “repo” in quotes because the term is a thin veil for what is indisputably the return of “QE” money printing.. Full Story
However, if TLT can muster an impulsive 5-wave rally off this week’s low, then that would suggest we are heading to $155+ sooner rather than later.
At this point in time, I would give the edge to the more immediate decline scenario. But I will be watching this chart carefully over the coming two weeks for confirmation. Full Story
By: Richard (Rick) Mills, Ahead of the herd - 23 October, 2019
In the first quarter of 2019, global debt hit $246.5 trillion.
Encouraged by lower interest rates, governments went on a borrowing binge as they ramped up spending, adding $3 trillion to world debt in Q1 alone. It reverses a trend that started in the beginning of 2018, of reducing debt burdens, when global debt reached its highest on record, $248 trillion.
The Wall Street Journal’s Jason Zweig famously referred to gold as a “Pet Rock” in 2015. He was blasted by people who understand that gold is no passing fad, and it serves some very important roles in an investment portfolio.
The valuable roles played by gold have been well covered here. It’s a hedge against both inflation and deflation, it represents true diversification for portfolios stuffed with conventional securities, and it is a way of protecting wealth during tumultuous times. Full Story
By: Keith Weiner, Monetary Metals - 22 October, 2019
We talk a lot about the falling interest rate, the too-low interest rate, the near-zero interest rate, the zero interest rate, and the negative interest rate. Hat Tip to Switzerland, where Credit Suisse is now going to pay depositors -0.85%. That is, if you lend your francs to this bank, they take some of them every year. Almost 1% of them.
A bank deposit comes with a risk. But instead of compensating you for the risk, the bank pays you nothing. So it’s a return-free risk. And worse than that, a negative rate means that you are paying the bank in order to take the risk of lending to them. Full Story
If the next phrase in America’s trade war involves isolating China from the US dollar SWIFT money transfer system, I would expect the dollar to go into freefall and gold to stage a parabolic rise to $3000/ounce.
I don’t think that happens, but continued de-dollarization is almost 100% certain, and that’s positive for gold. Simply put, in 2020 I expect gold stocks to continue where they leave off in 2019; as the best performing asset class in the world! Full Story
As September rolled into October, the US central bank’s monetary madness blew all over us like a fountain of foam in a windstorm. First, the Fed burst into $75 billion in overnight funding operations due to obvious shortages all over the map in bank reserves. Then the surge spread beyond that into longer-term temporary funding of $30 billion twice a week because the overnight loans were not up to the needs. That still not being enough to end the troubles, the Fed’s rapidly expanded the overnight operations to $100 billion and doubled the term operations to $60 billion. Those operations still did not end the troubles the Fed’s tightening had created, so the Fed decided to flood the murky money pools of this world with $60 billion in frothy treasury purchases. Although this money was permanent reinflation of the Fed’s balance sheet (unlike the temporary overnight and term repos), the Fed told us they are not QE (never mind that exactly like all previous QE, they give new fiat money with interest to primary treasury dealer banks that buy treasuries from the US government). The banks rushed in with more than four times the offers to resell treasuries they had purchased from the government to the Fed than what the Fed was willing to buy. Full Story
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