This post was published at X22Report
Tag: Monetary Policy
Litigation and Regulation
On January 30, 2017, President Trump issued an executive order entitled: ‘Reducing Regulation and Controlling Regulatory Costs.’1Known as the ‘One-In, Two-Out’ rule, it calls for dramatically reducing the regulatory burden upon the US economy. This executive order may do more for the US economy than any other economic proposal by the Trump administration, perhaps even far more than any enacted tax cuts.
There is no doubt regulatory reform is needed. From anecdotally looking at the effects upon particular industries (e.g., Dodd-Frank’s impact on preventing new community banks from opening), to the number of pages in the Federal Register, to estimates of lost man hours and direct expenditures from the Congressional Budget Office: the degree of the regulatory burden is clear. The US economy has never suffered to this extent.
How did it get this bad? Three primary reasons exist. First, unlike fiscal or even monetary policy, the burden imposed by regulations is more difficult to quantify and assign causality. Second, regulations exist and have increased in number by benefiting two primary constituents: entrenched businesses using regulations as a barrier to entry, and their politically connected lobbyists. Third, and of most significance, mainstream economists agree that without regulation, planes would crash in the sky, the food supply would be contaminated, and working conditions would degenerate to Neolithic-period levels. The acceptance of regulations is as widespread as the supposed underlying rationales are numerous.
This post was published at Ludwig von Mises Institute on May 20, 2017.
End of empire
“Already, China dominates world trade. Her own economy is already significantly larger than that of the US on the PPP estimates. While being the largest consumer of raw materials, China also exports more finished goods by value than any other country.”…
In last week’s Insight article, America’s Financial War Strategy, I described how the Chinese government viewed the geopolitical scene. It is clear from earlier remarks by the Peoples Liberation Army’s senior strategist, Major-General Qiao Liang, that the view in Beijing is that America perpetuates her empire through the financial benefits to America from America’s actions against other nations, friend or foe. These actions can be either military or financial, or even both. This week, similar views were expressed in Moscow by Sergey Glazyev, a senior advisor to President Putin.i
There are many questions that arise from last week’s analysis that I chose not to address, in the interest of focusing on the main theme. It concentrated on geopolitics and economics as the Chinese see them, financial and currency issues mentioned in passing. This article addresses perhaps the most important subsidiary issue, and that is how China visualises the future, in terms of monetary policy.
China’s eventual objective
If nothing else, the Chinese have a sense of history and destiny. They have had a glorious past, stretching back millennia, and once controlled most of the Asian heartland in the days of Genghis and Kublai Khan. But even then, China was essentially inward-looking, protecting her own cultural values. Trade with Europeans in the centuries following Marco Polo’s visit was mostly at the behest of European travellers, not the Chinese. She exported her art and culture to visitors, and did not import European values.
This was a mistake, implicitly recognised by China’s current leadership. This time, China has embraced Western thinking and technology to further her own progress. The development of the Shanghai Cooperation Organisation in recent years is the platform for China in partnership with Russia to embrace the Asian continent through peaceful trade, improving the lives of all the citizens of the many nations who are and will become members. The SCO promises a revolution in the wealth and living standards of over 40% of the world’s population, and associated benefits for its supplier-nations on the other continents.
This post was published at GoldMoney on APRIL 27, 2017.
Key Events In The Coming Week: All Eyes On Trump’s First Actions
The key economic releases this week are durable goods and GDP on Friday. On the political front, the focus will be is on the first actions of the Trump administration including moves on TPP and NAFTA. There are no scheduled Fed speeches this week.
Arond the globe, the UK Supreme Court decision on Art.50 and the Italian Constitutional Court’s decision on the electoral law are on Tuesday. In EM, we have monetary policy meetings in Colombia, Hungary, Turkey, South Africa and Ukraine.
The focus this week will remain on politics, and specifically the first actions of the Trump administration – last week his spokesman promised swift moves on TPP and NAFTA – but also on the UK as the Supreme Court decision on Article 50 is due on Tuesday. On this latter, much of the focus is on whether the court issues a separate judgement which would grant the regional assemblies of Northern Ireland, Wales and Scotland the right to vote on whether the Art.50 is triggered or not. Italian constitutional court decision on electoral law. The decision expected this Tuesday comes at a time when the main political parties are already negotiating for a new electoral law. At this point, with a partial rejection by the court being cited as a more probable outcome, a non-constitutionality decision may accelerate current negotiations for the new electoral law which aims to be more compatible with that of the Senate and favor a more proportional system.
This post was published at Zero Hedge on Jan 23, 2017.
Will the Swamp Swallow Trump?
Permanently Skewed TRUMP HOTEL, New York – Trump’s rambling army – professionals, amateurs, camp followers, and profiteers – is marching south, down the I-95 corridor. There, on the banks of the Potomac, it will fight its next big battle.
***
Here at the Diary, we do not like to get involved in politics. But this is a special time in the history of our planet – a time when politics will decide what kind of disaster we face.
Simplifying, if Congress holds the line against Trump, we will have a deflationary disaster. If it goes along with him, the disaster will be more of the inflationary variety. We are here at the Trump Hotel in SoHo to try to figure out which way it will go.
Until now, the feds used only one weapon in their fight to prevent a correction – monetary policy. They used it until the barrel melted and they ran out of ammunition. That leaves fiscal policy – old-fashioned deficit spending.
This post was published at Acting-Man on November 24, 2016.
Why Hillary Clinton Is Not Like Edward Snowden
Last night’s presidential debate was the latest episode in what appears to be a prolonged infomercial for Hans-Hermann Hoppe’s Democracy: The God that Failed. One of the rare libertarian highlights of the 2016 campaign, however, came when Donald Trump called for a special prosecutor in the case of Hillary Clinton’s unprecedented recklessness with her private e-mail server. While this issue obviously is minor in the face of America’s insane monetary policy, or horrific foreign policy, a key tenant of any libertarian society is the idea of a rule of law, rather than the law of rulers.
As such, it’s astonishing to see Will Wilkinson of the nominally libertarian Niskanen Center describe Trump’s suggestion as ‘dictator talk.’ Explains Wilkinson:
[I]t’s not Mr. Trump’s open contempt for the norms of liberal democracy that made my blood run cold. It was the applause that came after. It is the fact that it’s no longer assured that you automatically lose a presidential debate in which you promise to jail your political rival.
If it will help warm Mr. Wilkinson up, I would suggest that the reason Mr. Trump’s statement was met with great applause – not only in the debate room but on social media worldwide – is not simply that Secretary Clinton is Trump’s ‘political rival,’ but that she is a perfect example of obscene political privilege.
As Judge Andrew Napolitano has explained numerous times, it is clear that there exists enough publicly available information to indict Hillary Clinton. As he wrote in the immediate aftermath of the FBI announcing its decision to not prosecute:
This post was published at Ludwig von Mises Institute on Oct 10, 2016.
EU Commission Head Jean-Claude Juncker Keeps a ‘Little Black Book’ of People Who Betray Him
Jean-Claude Juncker, head of the European Commission, is most famous for a 2011 quote about the Greek financial crisis, during which he stated:
When it becomes serious, you have to lie.
But that’s just one of many disturbing statements from the man. In 2014, The Telegraph published a list of his most outrageous quotes.
As such, here’s some additional evidence of what a sleazy weasel this man is.
Juncker on EU monetary policy
‘I’m ready to be insulted as being insufficiently democratic, but I want to be serious … I am for secret, dark debates’
Juncker on British calls for a referendum over Lisbon Treaty
‘Of course there will be transfers of sovereignty. But would I be intelligent to draw the attention of public opinion to this fact?’
Juncker on French referendum over EU constitution
‘If it’s a Yes, we will say ‘on we go’, and if it’s a No we will say ‘we continue’,’
This post was published at Liberty Blitzkrieg on Aug 2, 2016.
You’ve Been Warned – Ben Bernanke Praises ‘Helicopter Money’ in Latest Blog Post
Don’t say you weren’t warned.
What follows are some excerpts from Banana Republic Ben’s latest blog post titled, What Tools Does the Fed Have Left? Part 3: Helicopter Money.
When monetary policy alone is inadequate to support economic recovery or to avoid too-low inflation, fiscal policy provides a potentially powerful alternative – especially when interest rates are ‘stuck’ near zero. However, in recent years, legislatures in advanced industrial economies have for the most part been reluctant to use fiscal tools, in many cases because of concerns that government debt is already too high. In this context, Milton Friedman’s idea of money-financed (as opposed to debt-financed) tax cuts – ‘helicopter money’ – has received a flurry of attention, with influential advocates including Adair Turner, Willem Buiter, and Jordi Gali.
In this post, I consider the merits of helicopter money as a (presumably last-resort) strategy for policymakers. I make two points. First, in theory at least, helicopter money could prove a valuable tool. In particular, it has the attractive feature that it should work even when more conventional monetary policies are ineffective and the initial level of government debt is high. However, second, as a practical matter, the use of helicopter money would involve some difficult issues of implementation. These include (1) the need to integrate the approach with standard monetary policy frameworks and (2) the challenge of achieving the necessary coordination between fiscal and monetary policymakers, without compromising central bank independence or long-run fiscal discipline. I propose some tentative solutions for these problems.
This post was published at Liberty Blitzkrieg on Apr 11, 2016.
The ECB’s Insane Monetary Policy is Creating a Rush Into Derivatives
One of the most catastrophic things central banks have done in the post financial crisis period is destroy financial markets. Investors are no longer investors, they’re merely helpless rats running around the lunatic central planning maze desperately attempting to survive by front running the latest round of central bank purchases.
While actual macroeconomic and corporate fundamentals do still exert influence on financial asset prices from time to time, the far bigger driver of performance over the past several years is central bank policy. To understand just how destructive this is, recall what we learned in last month’s post, Japan’s Bond Market is One Gigantic Joke – ‘No One Judges Corporate Credit Risks Seriously Anymore’:
TOKYO – Fixed-income investors in Japan are increasingly assessing bonds based on their likelihood of being bought by the central bank, rather than the creditworthiness of the issuers.
Still, the fund manager desperately wanted to get hold of the bond because he bets that debt issued by Mitsui and other trading houses will be picked up by the Bank of Japan in its bond purchase program. Even if an investor buys a bond with a subzero yield, the investor could sell it to the central bank for a higher price, the thinking goes.
‘It goes to show that no one judges corporate credit risks seriously anymore,’ said Katsuyuki Tokushima at the NLI Research Institute.
As insane as it may be, investors now acknowledge that fundamental analysis is merely an afterthought when compared to the far bigger influence of central bank buying. While this destroys free markets, fuels malinvestment bubbles and rewards cronyism, it doesn’t stop central planners – it merely emboldens them. The latest example of such hubris was on full display last month when the ECB’s Mario Draghi increased QE by a third. Here’s some of what’s happened since.
This post was published at Liberty Blitzkrieg on Apr 5, 2016.
Markets Ignore Fundamentals And Chase Headlines Because They Are Dying
Normalcy bias is a rather horrifying thing. It is so frightening because it is so final; much like death, there is simply no coming back. Rather than a physical death, normalcy bias represents the death of reason and simple observation. It is the death of the mind and cognitive thought instead of the death of the body.
Ever since the derivatives collapse of 2008 the public has been regaled with wondrous stories of recovery in the mainstream to the point that such fantasies have become the “new normal”. These are grand tales of the daring heroics of central bankers who saved us all from impending collapse through gutsy monetary policy and no-holds-barred stimulus measures.
Alternative economists have not been so easy to dazzle. Most of us found that the recovery narrative lacked a certain something; namely hard data that took the wider picture into account. It seemed as though the mainstream media (MSM) as well as the establishment was attempting to cherry-pick certain numbers out of context while demanding we ignore all other factors as unimportant.
We just havent been buying into the magic show of the so called professional economists and the academics, and now that the real and very unstable fiscal reality of the world is bubbling to the surface, the general public will begin to see why we have been right all these years and the MSM has been utterly wrong.
This post was published at Alt-Market on Wednesday, 17 February 2016.
Angela Merkel Plots To Overthrow Her People
Angela Merkel, elected for life, or for what seems like an eternity, squints at ordinary Germans from behind the parapets of her usurped authority. The German chancellor has signaled her express intention to foist a new identity on the German people, whether they like it or not, and without the broad consent of her citizens (or subjects). This Merkel has done by absorbing ‘an unprecedented influx of immigrants who will fundamentally change the country.’
The quest to engineer a single European identity is at the heart of the European refugee crisis. (That, and the foreign policy of George W Bush, Barack Hussein Obama and Hillary Clinton, who elected to pulverize Iraq, Libya and Afghanistan and thus destabilized the region.) ‘It remains unmistakably true,’ wrote British patriot and classical liberal philosopher David Conway, that ‘from its postwar beginnings to the present, the principal advocates and architects of European union have been uniformly animated by collectivist objectives that are deeply anti-liberal in spirit and form.’
Indeed, her tyrannical power to overthrow the German people and import another in their place, Merkel derives from the EU Constitution. To wit, ‘The EU already has rights to legislate over external trade and customs policy, the internal market, the monetary policy of countries in the Eurozone, agriculture and fisheries, many areas of domestic law including the environment and health and safety at work,’ as has the supra-state extended its rights into what it calls ‘justice policy,’ especially ‘asylum and immigration.’
This illiberal impetus has allowed the like-minded Merkel, operating with legal imprimatur from Brussels, to assume the authority once reserved to the sovereign people of Germany. Were it not for the rigid controls the EU exerts over its satellite states – each European member country would be free to respond to the (mostly) Muslim influx in a manner consistent with the wishes of their citizens, and not those of the Bismarckian Bureaucracy, with which Merkel identifies, and its many crooked beneficiaries.
This post was published at Lew Rockwell on November 14, 2015.
The Latest Evidence That Global Trade Has Collapsed: India’s Exports/Imports Plunge By 25%
Late last month, India surprised 51 out of 52 economists when the RBI cut rates by 50bps.
Although economists have a reputation for being terrible when it comes to making predictions (getting it wrong perpetually is almost a job requirement), it’s difficult to understand how 51 of them failed to see a cut of that magnitude in the cards.
After all, it was just a little over a month earlier when the Indian government’s chief economic advisor Arvind Subramanian told ET Now television that India may need to “respond” to China’s monetary policy stance. He also hinted at further export weakness to come.
This post was published at Zero Hedge on 10/15/2015.
India “Surprises” 51 Out Of 52 “Experts”, Slashes Rates More Than Expected As Easing Bonanza Continues
Late last month, we asked how long it would be before the RBI hit back in the wake of China’s yuan deval.
The Indian government’s chief economic advisor Arvind Subramanian had just told ET Now television that India may need to “respond” to China’s monetary policy stance, and also hinted at further export weakness. It wasn’t hard to read between the lines: more shots were about to the be fired in the ongoing global currency wars.
Reinforcing that contention was the following from Deutsche Bank:
India’s export sector continues to be under pressure, with merchandise exports contracting yet again in July by 10.3%yoy. The weakness in India’s exports is striking (this is the eighth consecutive month of decline), not only in terms of past trend, but also from a cross country perspective. Indeed, India’s exports performance has been the weakest in the region thus far in 2015. In the first quarter of the current fiscal year (April-June’15), Indian exports have contracted by 17%yoy, one of the sharpest declines on record. The main reason for such a weak Indian export performance can be attributed to the sharp decline in oil exports (down 51%yoy between April-June’15), which constitute 18% of total exports.
This post was published at Zero Hedge on 09/29/2015.
Treasury’s Lew Exposes Fast Track as a Sham
For someone supposed to be a political whiz due to staff experience on Capitol Hill, Treasury Secretary Jack Lew sure has been acting like a political bungler in explaining to Congress why strong currency manipulation sanctions don’t belong in trade deals like President Obama’s proposed Trans-Pacific Partnership (TPP).
In his April 21 letter to the Senate Finance Committee, Lew both fatally undermined both the president’s insistence that the fast track bill gives Congress meaningful influence on U. S. trade negotiations, and Washington’s (feeble) efforts to end protectionist exchange rate policies abroad.
Lew’s letter, after all, emphasized two arguments. He claimed, ‘all of the partners consulted have made clear that they will not support the introduction of enforceable currency provisions in the context of trade agreements, and specifically, the TPP.’ And he pointed to the administration’s ‘serious concern that in any trade negotiation other countries would insist that an enforceable currency provision be designed so it could be used to challenge legitimate U. S. monetary policy, an outcome we would find unacceptable.’
This post was published at Wall Street Examiner by Alan Tonelson ‘ April 27, 2015.
PBOC Cuts Reserve Requirement By 0.5%, Joins 15 Other Central Banks Easing In 2015
Moments ago the number of central banks who have eased so far in 2015, most of them unexpeted, rose by one more from 15 to 16, when in addition to Singapore, Europe, Switzerland, Denmark, Canada, India, Turkey, Egypt, Romania, Peru, Albania, Uzbekistan and Pakistan, Russia and, most recently, Australia it was China’s turn to do what so many banks had said was inevitable, even if meant backtracking on all its blustery talk about limiting bad debt expansion, and cut its reserve requirement ratio for bank by 0.5% effective Thursday, to boost liquidity and support the economy.
The full statement, google translated:
People’s Bank of China decided to cut financial institutions RMB deposit reserve ratio by 0.5 percentage points since February 5, 2015. Meanwhile, to further enhance the ability of financial institutions to support structural adjustment, increase small and micro enterprises, “three rural” and support the construction of major water projects, small and micro business loans accounted for directional drop quasi standard of urban commercial banks, additional non-county rural commercial banks decreased by RMB deposit reserve ratio by 0.5 percentage points, the Agricultural Development Bank of China to reduce extra RMB deposit reserve ratio by 4 percentage points.
People’s Bank of China will continue to implement a prudent monetary policy, maintain an appropriate degree, guiding monetary credit and social financing scale steady moderate growth, and promote the smooth operation of economic health.
This post was published at Zero Hedge on 02/04/2015.
“We Have Been Captured… We Are Parented, Not Represented”
Today I was debating the idea of Western domination. And one of the things that came up was the idea of how ‘lucky’ the world is that China and Russia have been able to maintain a sense of independence from the Western front. Imagine a world completely unchallenged by Western dominance, which we know is precisely the goal of our ambitious Western leaders. The goal, as stated by many Western leaders including George Bush Senior whilst President in an address to the nation, is to come to some New World Order of centralized control, with unified laws and principles enforced from one power centre.
Currently Western foreign and monetary policy are controlled and enforced by this central power centre. That is clear given that the policy objectives are unified whilst their implications are broad and even conflicting. What I mean by that is while the policy is embraced by all Western nations the implication of the policies go from being negligible, like here in the US, to economically crushing like in Europe. So if foreign policy decisions were fragmented amongst Western nations the harsh implications of such policies would prevent those respective nations from supporting such policy decisions. But the policies are supported, if not by the people of those nations (refer to farmers burning down of the Ministry of Agriculture building in France), then by their respective political classes and thus must be being decided as a central power.
Given the desperate position the Western rulers are willing to put French and German farmers (and so many more European industries) in for the ‘perceived greater good’, imagine the lack of representation for any group or individual under the thumb of a global central power. Especially without the distraction of overcoming challengers like the Chinese and Russians.
This post was published at Zero Hedge on 01/16/2015.
Ron Paul’s Ten New Year’s Resolutions For Congress
Since New Year’s is traditionally a time for resolutions, and since the new Congress convened this week, I thought I would suggest some New Year’s resolutions for Congress:
1) Bring the troops home – Congress should take the first, and most important, step toward ending our hyper-interventionist foreign policy by bringing our troops home and closing all overseas military facilities. The American people can no longer afford to bear the cost of empire.
2) Pass the Audit the Fed bill – The American people deserve to know the entire truth about how the Federal Reserve’s monetary policy benefits big-spending politicians and financial elites while harming average Americans.
3) Repeal the PATRIOT Act and rein in the National Security Agency – It is approaching two years since Edward Snowden revealed the extent of the NSA’s unconstitutional spying. Yet Congress still refuses to put a leash on the surveillance state. Congress should take the first step toward restoring respect for the Fourth Amendment by allowing Section 215 of the PATRIOT Act to expire.
4) Shut down the Transportation Security Administration – Treating all American air travelers as criminal suspects and subjecting them to intrusive and humiliating searches does nothing to enhance our security. Congress should shut down TSA and return responsibility for airline security to the airlines. Private businesses can effectively protect their customers and employees if the government gets out of the way.
This post was published at Zero Hedge on 01/09/2015.
John Goodman: The Destruction of US Healthcare and How to Fight Back
Introduction: John C. Goodman is Senior Fellow at The Independent Institute and author of the widely acclaimed book, Priceless: Curing the Healthcare Crisis, which provides an alternative to ObamaCare. Most recently John wrote Living with ObamaCare: A Consumer’s Guide (2014). The Wall Street Journal and National Journal, among other media, have called him the “Father of Health Savings Accounts.” He blogs regularly atForbes. Dr. Goodman regularly appears on TV and radio programs and is frequently invited to testify before Congress on healthcare reform. A libertarian economist, Goodman is former president of the National Center for Policy Analysis, a free-market think tank established in 1983, and former editor of “Health Policy Blog.” In addition to ten books, including Lives at Risk: Single-Payer National Health Insurance Around the World(with Gerald L. Musgrave, and Devon M. Herrick, 2004), Patient Power: Solving America’s Health Care Crisis (1992), which sold more than 300,000 copies, Dr. Goodman is the author of more than 50 studies on health policy, retirement reform and tax issues.
Daily Bell: Thanks for speaking with us. Before we ask about your new book, Living With ObamaCare: A Consumer’s Guide (2014), give us an overview of what led to your particular interest in healthcare.
John Goodman: I got into healthcare by accident. It’s a sleepy field. The best economists are not in healthcare; they’re in monetary policy or growth economics. It was a field that desperately needed radical revision, and most of what I’ve done in health economics has been a radical revision of what was done before.
I was asked to do a study of the British National Health Service and through that I discovered that health economics was a field that desperately needed help and the traditional health economics textbooks are of very little value in analyzing either our own healthcare system or the healthcare systems of other countries.
Daily Bell: You describe Living with ObamaCare as a “shorter and easier to read” version of Priceless, essentially, an unbiased, objective assessment of ObamaCare – “the good, the bad and the ugly.” Where can readers buy your book?
John Goodman: They can buy it at Hudson Booksellers in airports around the country. It can also be found at Borders, Amazon and some other book distributors.
Daily Bell: Who is the intended reader?
John Goodman: This book is intended for everyone. It’s based around questions – What if I’m a doctor? What if I don’t have health insurance? What if I run a small business? – and then it tells you the good, the bad and the ugly about ObamaCare for each of those questions.
This post was published at The Daily Bell on With Anthony Wile – November 09, 2014.
On The Precipice Of A Breakdown In Confidence
People think it must be fun to be a super genius, but they don’t realize how hard it is to put up with all the idiots in the world.
? Bill Watterson, ‘Calvin And Hobbes’
Here is the most fundamental idea behind game theory, the one concept you MUST understand to be an effective game player. Ready?You are not a super genius, and we are not idiots. The people you are playing with and against are just as smart as you are. Not smarter. But just as smart. If you think that you are seeing more deeply into a repeated-play strategic interaction (a game!) than we are, you are wrong. And ultimately it will cost you dearly. But if there is a mutually acceptable decision point – one that both you and we can agree upon, full in the knowledge that you know that we know that you know what’s going on – that’s an equilibrium. And that’s a decision or outcome or policy that’s built to last. Fair warning, this is an ‘Angry Ben’ email, brought on by the US government’s ‘communication policy’ on Ebola, which is a mirror image of the US government’s ‘communication policy’ on markets and monetary policy, which is a mirror image of the US government’s ‘communication policy’ on ISIS and foreign policy. We are being told what to think about Ebola and QE and ISIS. Not by some heavy-handed pronouncement as you might find in North Korea or some Soviet-era Ministry, but in the kinder gentler modern way, by a Wise Man or Woman of Science who delivers words carefully chosen for their effect in constructing social expectations and behaviors.
The words are not lies. But they’re only not-lies because if they were found to be lies that would be counterproductive to the social policy goals, not because there’s any fundamental objection to lying. The words are chosen for their truthiness, to use Stephen Colbert’s wonderful term, not their truthfulness. The words are chosen in order to influence us as manipulable objects, not to inform us as autonomous subjects.
This post was published at Zero Hedge on 10/14/2014.
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