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Tag Archives: Central Banks

The next generation of digital currencies: in search of stability

Recent developments have re-opened the debate on the future of money. This Policy Contribution discusses two aspects: the implications of the rise of global private stablecoins, such as Facebook's Libra, and the role that public central bank digital currencies could play.Four major developments have challenged the status quo and reopened the debate on the forms that money will take in the future: 1) use of cash as a medium of exchange has declined; 2) distributed ledger technology (DLT) has...

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The Fed’s Answer to the Ghastly Monster of its Creation

  The Bubble Machine The launch angle of the U.S. stock market over the past decade has been steep and relentless. The S&P 500, after bottoming out at 666 on March 6, 2009, has rocketed up over 370 percent. New highs continue to be reached practically every day. S&P 500 weekly, since the low of 2009. A party of roaring 20s proportion in terms of duration, extent and end point valuations (a post-war inflation episode triggered a...

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Japan’s Yield Curve Control Regime is Coming to America

  Monetary Lunacy, Nipponese Version Earlier this month, Bank of Japan (BOJ) Governor Haruhiko Kuroda commented that Japan’s central planners are considering a 50-year government bond issue as a long-term means of putting a floor under super-long interest rates.  How this floor would be placed is extremely suspect; we will have more on this in a moment.  But first, the dual benefits – according to Japan’s central planners… Kuroda-san:...

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Repo Market, QE4 (a.k.a. Not QE), the Fed and Gold

  Incrementum Advisory Board Discussion of 23 Oct 2019 In late October the Advisory Board of the Incrementum Fund held its quarterly meeting (a transcript is available for download at the end of this post). This time the board was joined by special guest Dan Oliver, the manager of Myrmikan Capital and president of the Committee for Monetary Research & Education.  Myrmikan inter alia publishes excellent and quite original research on...

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Is the Fed Secretly Bailing Out a Major Bank?

  Prettifying Toxic Waste The promise of something for nothing is always an enticing proposition. Who doesn’t want roses without thorns, rainbows without rain, and salvation without repentance?  So, too, who doesn’t want a few extra basis points of yield above the 10-year Treasury note at no added risk? The yield-chasing hamster wheel… [PT] Thus, smart fellows go after it; pursuing financial innovation with unyielding devotion.  The...

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The Federal Reserve is a Barbarous Relic

  The Sky is Falling “We believe monetary policy is in a good place.” – Federal Reserve Chairman Jerome Powell, October 30, 2019. The man from the good place. “As I was going up the stair, I met a man who wasn’t there. He wasn’t there again today, Oh how I wish he’d go away!” [PT] Ptolemy I Soter, in his history of the wars of Alexander the Great, related an episode from Alexander’s 334 BC compact with the Celts ‘who dwelt by the...

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How to Prepare as the Fed Scorches the Earth

    Wildfire Surge The hillsides are always brown in the land of fruits and nuts come autumn.  After baking away all summer long in the hot sun, the dense sage and chaparral covering the coastal hillsides and canyons are dry and toasty. Though, before conditions get better, they must first get worse. California is ablaze again… as every year.  [PT] Photo credit: Noah Berger / AP High pressure systems form over the high-elevation...

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Central Banker Angst – Precious Metals Supply and Demand

  Ominous Pronouncements The prices of the metals barely budged last week. It is interesting to note that last week, more than one central banker felt it necessary to say something about a possible next crisis. And at least one of them said something about gold. Lost as always, and apparently slightly nervous these days… [PT] We do not place much stock in what these guys say for obvious reasons. Like Elmer Fudd armed with a gun that...

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US Money Supply Growth – Bouncing From a 12-Year Low

    True Money Supply Growth Rebounds in September In August 2019 year-on-year growth of the broad true US money supply (TMS-2) fell to a fresh 12-year low of 1.87%. The 12-month moving average of the growth rate hit a new low for the move as well. The main driver of the slowdown in money supply growth over the past year was the Fed’s decision to decrease its holdings of MBS and treasuries purchased in previous “QE” operations. This was...

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Fed Chair Powell’s Inescapable Contradiction

  Under the Influence   “This feels very sustainable.”  – Federal Reserve Chairman Jerome Powell, October 8, 2019 Understandable confusion… [PT] Conflict and contradiction.  These were two of the main themes reverberating around the world of centralized monetary planning this week. On Tuesday, for instance, a novel and contradictory central banker parlance – “reserve management purposes” – was birthed into existence by Fed Chair Jay...

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